What is an emergency loan?
An emergency loan is a personal loan that you use to pay a medical bill, get a car repaired, or cover some other urgent expense. These loans can be secured or unsecured – unsecured loans are more widely available – and can come from an online lender, a credit union, or certain banks.
Check the lender’s requirements to see if you are meeting them. Lenders generally have a minimum credit score and maximum debt-to-income ratio requirements. Some offer co-signed or joint loan options that may be easier to obtain.
Look for a lender who can fund your loan quickly (the fastest funding is usually the same day your application is approved or the next day) and who offers the loan amount you are looking for.
Why we chose these lenders
Reached is an online lending platform that takes into account alternative data on an application, including where you live and attended school, in addition to credit and income information. The company says it finances 99% of loans within one business day of approval.
Best egg says its application only takes a few minutes, and loans are funded within a business day of approval in some cases. Although the lender approves applicants with fair credit, the average credit score is 700, which is in the correct range on the FICO scale.
Main offers personal loans to borrowers with low credit scores, but they come with high APRs and origination fees. The lender can fund loans quickly by check, but you must go to a branch to complete the process.
Universal CreditThe low minimum credit score makes it a good choice for borrowers with good or bad credit. The five-day lender’s average finance time is longer than others, but if you can wait, you’ll have access to payday loans no credit check building tools like credit monitoring and a credit score simulator.
Before has a low minimum credit score requirement and says it can fund a loan one business day after approval. His annual percentage rate includes an administrative fee of up to 4.75%. The company reports payments to the three major credit bureaus – Experian, Equifax, and TransUnion – which can help you create credit.
Point Ready lends to borrowers with low credit scores and little existing debt. The company says it can fund a loan the next business day after approval, but in some cases it may take longer.
Opportune Offers small installment loans to borrowers with little or no credit history at high rates compared to other bad credit lenders. It only works in a few states and sometimes funds loans within hours, whether you apply online or in person.
How to choose an emergency loan
Compare the total cost: Speed may be your priority, but the total cost of the loan will have a lasting effect on your finances, so look for the cheapest loan, the one with the lowest annual rate, which includes both the interest rate. and fees.
Most online lenders offer prequalification, which involves a smooth credit check and lets you preview your rate and term without affecting your credit score.
Check the monthly payments: Evaluate the impact of monthly loan payments on your budget to determine if you can comfortably pay it off on time.
Use a personal loan calculator to see how much you can borrow and what rate and term you will need to make it affordable.
Funding speed: If you are in dire need of funds, consider a lender who offers quick financing. While some lenders offer same day financing, typical financing times are two to seven days.
Online lenders often disclose the timeline in an FAQ or blog section of their websites, so you’ll know what to expect before you apply.
Gather the required documents – including W-2s, pay stubs, and bank statements – before you apply for a loan, and respond to the lender’s questions promptly to speed up the application process.
How to get an emergency loan with bad credit
A bad credit score (less than 630 FICO) doesn’t automatically prevent you from getting a loan, but your rating is the biggest factor in applying for a loan.
Add a co-signer or a co-borrower
Adding a co-signer or co-borrower can increase your chances of qualifying or getting a good loan rate. A co-borrower has equal access to funds, unlike a co-signer. If you cannot repay the loan, the co-signer or co-borrower is responsible for the loan.
Some lenders offer secured personal loans, which allows borrowers to add collateral to the loan and can help bad credit borrowers qualify. If you don’t make any payments, the lender can take the collateral.
Turn to a credit union
Try your bank
If you are a Bank of America or US Bank customer, you may be able to get one of their small loans. Bank of America Balance Assistance offers up to $ 500 for a flat fee of $ 5. Simple loan from the American bank can range from $ 100 to $ 1,000, and the loan has a fee of $ 12 to $ 15. Both are repaid in three monthly installments.
Emergency loan alternatives
Cheaper alternatives borrowing is not always quick or convenient and sometimes requires asking for help. But NerdWallet strongly recommends exhausting alternatives first, even in an emergency. Here are some possible alternatives to an emergency loan.
Emergency loans to avoid
Payday loans are short term, high cost loans. Even in an emergency, they are a risky option. Payday lenders charge a fee equivalent to an APR of 400%, do not check your credit score, and may not confirm your ability to repay the loan.
But they ask for access to your bank account or a blank check to withdraw the money you owe on your next payday. Borrowers who are not ready to repay the loan by then often borrow again, which sends them into a cycle of debt.
Car title loans
With an auto title loan, a lender assesses the value of your vehicle and offers to lend you a percentage of that amount. If you agree, the lender retains title to the car and you receive your loan.
The lender typically does not review your ability to repay the loan and may charge 200-300% APR. These loans are risky because the lender holds the title to your car. If you can’t pay, he’ll take your car.
Pawn shops can have lower APRs than payday and auto title loans, but the risk is similar to auto title loans: rates above 100% and the possibility of losing something you value.
With a pawnshop, you hand over something of value to a pawnshop, they assess its value, and give you a loan based on that assessment. You have to pay it back, with interest, or they’ll keep your item.
If you manage to repay the loan but it takes up too much space in your bank account, you could end up going back to the pawnshop.
Installment Loans Without Credit Check
Beware of online lenders who position themselves as inexpensive alternatives to payday loans, but don’t check your credit. Some installment loans without credit check share similarities with payday loans and auto loans, including exorbitant interest rates and additional fees that make the loan less affordable than initially thought.
Lenders like Rise and OppLoans offer longer-term emergency loans, but their rates remain high. Only consider these lenders after ruling out the cheaper alternatives.
Capital goods fund is another no credit check lender that offers lower rates but is only available in a handful of states.
Tips for building an emergency fund
Once your emergency is over, build a emergency fund to avoid taking out high cost loans in the future.
Here are some tips for getting started with an emergency fund:
Set a savings goal. Most financial experts recommend saving between three and six months in living expenses. Starting with a goal of saving at least $ 500 can usually cover small emergency expenses like minor car repairs.
Automate savings. Automatically transfer a small amount – maybe $ 10 or $ 20 to start with – to a separate savings account. That way it’s out of sight, out of mind, but there when you need it.
There is an application for that. Some applications will round your spending account transactions to the nearest dollar and deposit the change in a savings account. It’s like a spare pot on your phone.
Put away the deals. The last thing you want to do with birthday money is save it, but one way to start your emergency savings is to set aside money you haven’t talked about yet, such as small work bonuses, gifts and tax refunds.