|the lender||April range||Minimum loan amount||Maximum loan amount||Conditions||Credit score required|
|missile loans Best for quick financing||5.97% to 29.99%||2000 dollars||$45,000||30 or 60 months||580+|
|Before Best for flexible payment||9.95% to 35.99%||2000 dollars||$35,000||24 to 60 months||600+|
|PenFed Best emergency loan from credit union||4.99% to 17.99%||600 dollars||$50,000||up to 60 months||580+|
|LendingClub Best Peer-to-Peer Emergency Loan||7.04% to 35.89%||1000 dollars||40 thousand dollars||36 or 60 months||600+|
|local credit unions Best alternative payday loan||up to 28%||Nobody||Up to $2000||1 to 12 months||Unavailable|
questions and answers
What is an emergency loan?
An emergency loan is a term that describes several different ways you can get cash for sudden and unexpected expenses. A common type of emergency loan (and often one of the most affordable options) is a personal loan, but an emergency loan may come in the form of a credit card cash advance, payday loan, alternative payday loan, or even a loan from a friend or family member.
Can I get an emergency loan with bad credit?
Borrowing options tend to be more limited when you have bad credit. However, this does not mean that you are automatically lucky. You may be able to qualify for an emergency loan even with bad credit.
It is important to have realistic expectations when trying to borrow money with credit challenges, particularly when it comes to cost and borrowing restrictions. Since there is more risk involved with the lender, emergency loans for those with bad credit can be very expensive.
High annual interest rates and fees are common with emergency loans for bad credit. As a borrower with bad credit, you may not be able to borrow as much money as someone with a good credit score. On the bright side, there are smart strategies you can use to improve your credit rating over time.
Where can you get an emergency loan with bad credit?
There are multiple types of lenders that provide emergency loans for bad credit. Some of the more popular options include:
- Online Lenders
- credit unions
- conventional banks
- Credit Card Companies (Cash Advance)
- Relatives and friends
- Payday Lenders
Remember that just because you have a borrowing option does not mean it is a good choice. For example, credit card cash advances are expensive and may harm your credit score by increasing your credit utilization rate.
Payday loans and property loans should also be avoided whenever possible. The Consumer Financial Protection Bureau (CFPB) warns that the average two-week payday loan has a high annual rate of nearly 400%.
Will the emergency loan affect my credit score?
Some types of emergency loans can affect your credit score, while others will not. Whether one does this primarily depends on whether it appears on your credit report with Equifax, TransUnion, or Experian.
If the lender does not report your account to the credit bureaus, the loan will not affect your credit score (unless you default and the collection agency adds bad debts to your credit reports at a later date). However, if the lender shares your account details with the credit bureaus, that’s a different story.
Banks, credit unions, and online lenders typically report account details to credit bureaus. Payday lenders and equity lenders generally do not.
When a lender reports an emergency loan to the credit bureaus, the way you manage the account dictates whether it will help or harm your credit score. If you make all your payments on time, the account may benefit your credit score in the long run. However, if you make late payments or fall behind on your debt, the emergency loan itself could hurt your credit score instead.
How to choose an emergency loan?
When a lender receives a loan application, they generally begin the consideration process with some research. By checking your credit report and score, the lender can weigh the risks of taking you as a client.
Likewise, you should do your homework any time you think of taking on new debt. You should always review the pros and cons of any financing option before borrowing money – even in an emergency.
Before you choose a bad credit emergency loan, here are some important questions to ask:
- Can I afford a new monthly payment?
- Does this lender offer loans to borrowers with bad credit?
- What does the lender charge for emergency loans (APR range)?
- Are there additional fees I should be aware of?
- How long will I have to repay the loan?
- Is there a pre-qualification option to check the potential price and loan offer in advance?
- When will I receive the funds soon if I am eligible?
Repeat the above questions as you search for multiple emergency loan options. Even when you are in a hurry, it is best to compare several lenders to make sure you get the best deal for your situation.
How quickly can I get an emergency loan?
When you need an emergency loan, you usually have to get the money quickly. Fortunately, there are many lenders that offer quick financing to qualified borrowers. Some personal loan lenders may deposit funds into your bank account on the same day the financing is approved.
On the other hand, loan financing can sometimes take several days or even a few weeks. Certain lenders may take longer to process your loan application or release your money than others. There is also a chance that your personal bank or credit union may hold the money the lender deposits in your account for a few days before you can access the funds.
How do you prepare for emergency expenses?
A 2020 Federal Reserve study revealed that more than 25% of adults don’t have the money to cover their $400 emergency expenses, so if you don’t currently have money set aside to deal with unexpected expenses, you’re far from alone. Creating an emergency fund now is the best way to prepare for sudden expenses in the future. The following five tips can help you get started.
- Track your spending Challenge yourself to record every dollar you spend for a month, including small cash purchases.
- Create a realistic budget based on your monthly bills and spending habits You can use the appropriate budgeting software or even a simple pen and paper to get the job done.
- Find ways to reduce your current expenses When you free up extra cash in your budget, you can use it to pay off debt (which creates more opportunities to save) and save.
- Open a separate savings account dedicated to emergency fund monitoring High yield savings accounts can help your money grow faster.
- Get in the habit of saving some money every pay period Remember, it’s okay if you want to start small.
Are there alternatives to emergency loans?
Emergency loans can offer you much-needed relief in certain situations, however taking on more debt may not be the best solution if you are already struggling financially. Before you fill out a new loan application, check your budget and make sure you can afford the monthly payments. If you believe that additional debt will increase your financial capacity, an alternative approach may be the best option.
Emergency Loan Alternatives
- Try to negotiate with creditors on modified hardship payment plans.
- Temporarily consider making minimal payments on your credit cards to free up additional money. (This should only be a short-term approach and not an ongoing habit.)
- Ask your employer for an advance on the salary.
- For small emergencies, consider a salary advance from Earnin or similar services.
Note that some employers offer 401(k) withdrawals to help employees meet immediate and burdensome financial needs, but you should always proceed carefully and consider the consequences before tapping into your retirement savings.
Facing emergency expenses without the funds to cover them can be a stressful experience. If you have bad credit, which makes it more difficult and more expensive to borrow money, you may feel even more desperate. The best thing you can do in this situation is to take a deep breath and think about your options.
If you decide to borrow money, compare several emergency loan offers to make sure you find the best solution for your situation. Then, once you recover, make a plan to put yourself in a better position in the future. You can work on building an emergency fund (slowly, if necessary) and improving your credit. Both moves can help you the next time you hit unexpected expenses.
How to choose the best emergency loans for bad credit
Investopedia’s mission is to provide our readers with unbiased and comprehensive reviews of financial products they can trust. We’ve looked at dozens of personal loan options and compared interest rates, fees, eligibility requirements, and other features so we can share some of the best deals currently available with you. Our goal is to provide you with the knowledge you need to make informed decisions when you are ready to borrow.