What can I use an emergency loan for?

Emergency Loan

What can I use an emergency loan for?

An emergency loan is a personal loan that can be used for nearly anything.

  1. For medical bills. An emergency loan is available if you have been to the emergency department or experienced an unexpected medical expense.
  2. Rent or mortgage payments. An emergency loan is available to help you pay your bills until you are paid back.
  3. You can keep the lights on and your phone from getting turned off by taking out an emergency loan to cover utility bills. By paying your bills on time, you can avoid falling behind and decrease the chance of losing credit.
  4. Funeral expenses. You may need an emergency loan if your loved one has died and you don’t have the funds to pay for funeral expenses or other expenses.
  5. Car or home repairs. Although you may find a better interest and terms with a home equity loan or line of credit (HELOC), some home repairs require immediate attention and payment. Auto repairs can also happen at the worst times. An emergency loan is available to cover the costs of fixing your car or financing home repairs if you can’t wait.

There are restrictions that personal loan lenders may place on emergency loans. You might not be able to use them to cover postsecondary education costs. Before you submit an application, make sure to review the terms and restrictions of any potential lender.

How to choose an emergency loan

It is important not to pick the first emergency loan lender you find when you are looking at many options. Consider these factors when searching for the right lender:

Funding time. When can your money be transferred to your account? Ideal is to have your money in as little as one to two days. Deposit funds can take up to a week for some lenders, while others can deposit funds in as little as one day.

Interest rates. Although having great credit can get you the best interest rate, it is worth considering what lenders charge for credit with less than stellar credit. Compare lenders to find out how much each would charge based on your credit score.

Terms of repayment. Would you like to make higher monthly payments and repay your loan faster? Are you looking for smaller monthly payments and a longer repayment term? Lenders may require that you repay the minimum amount each month for emergency loans. However, terms can vary from one lender to another. If you borrow $500, you might only have a few months to repay it.

Fees. Check the fine print to find out what fees each lender charges. Common fees for emergency loans include late payment penalties and origination fees.

Credit score requirements. Lenders have strict requirements regarding credit scores that you must meet in order to get a loan. Your credit score can have an impact on your interest rate and the amount you are able to borrow.

Every lender has its own standards and requirements. Before applying for an emergency loan, make sure you read as many of them as possible.

How to get an emergency loan

Although the process will vary from lender to lender, these steps are the most common to apply for an emergency personal loans:

Check credit score. Get your score free of charge from your credit card company or any other website that provides free scores. This will allow you to assess your creditworthiness, and help you determine your eligibility chances. You should aim for a score between 610 and 720. However, the best terms will be offered to you if your score is at least 720.

Take steps to improve credit scores if necessary. To get the best terms, you need to take the time to increase your credit score, including lowering credit usage and paying off any unpaid debts.

Calculate how much debt you will need to consolidate. Calculate how much money you will need to consolidate your debts after you have checked your credit score. You’ll get your money in a lump sum and will have to pay interest. So only borrow what you really need.

Compare rates and terms with different lenders. This allows you to see what terms you might get with a soft credit inquiry, which won’t affect your credit score.

Complete a formal application. Wait for a decision from a lender. You can submit your application online, or in person. This process may take several hours or days depending on the lender.

How to get an emergency loan with bad credit

You won’t qualify for a personal loan to anyone with bad credit or poor credit according to FICO (a score between 350 and 579).

Get a cosigner for an emergency loan. This can increase your chances of approval. A cosigner is someone who helps a potential borrower get a loan. The cosigner pledges to repay the loan if they don’t. Typically, the lender relies on the cosigner’s credit score more during the application process.

Utilize available collateral. Some personal loan lenders offer secured options, which means you can pledge collateral–something of value like real estate, vehicles, cash and investments–to help reduce the risk you pose on the lender as a bad-credit borrower. The lender may take the collateral if you don’t meet your repayment obligations.

Apply through credit unions. Credit unions have more flexible qualifications requirements than traditional lenders or banks. Ask your local credit union about bad-credit options.

Where can I get an emergency loan?

Although you can obtain an emergency loan through your credit card issuer, or a payday loan lender for that matter, we recommend that you get a traditional, unsecured personal loan from a credit union, bank, or online lender.


You may be able to get a personal loan if you have a traditional bank account at an institution brick-and-mortar.

Different processing methods are used by banks than other lenders. Some banks require you to have a higher credit score or meet income requirements in order to be eligible for a personal loan. You may not receive the money you need as quickly as you would like. Before you apply, make sure you check how long it takes to deposit funds into your account.

Credit unions

Credit unions can offer emergency loans if you have a credit card union account. Credit unions are community-based, and more welcoming to borrowers with good and bad credit.

Although credit union emergency loans can vary in amount, many offer payday alternatives loans between $200 to $1,000. Remember that credit unions may only lend to members who are members for a specific amount of time. You may be able to find other options if you don’t meet these requirements or require more borrowing.

Online Lenders

There are many online lenders that offer emergency loans. Most don’t require you be a current account holder or a member. Many lenders offer prequalification so that you can determine if you are eligible to borrow an emergency loan. This will help you avoid having to go through a credit check, which can have a negative impact on your credit.

Although you may not feel comfortable applying for a personal loan online, many traditional banks offer online processing and applications. Make sure it is a trusted online lender that has a secure website, strong offerings, and has a solid reputation.

Alternatives to Emergency Loans

When you need to borrow money quickly, emergency loans are not your only option. Consider these options before you apply for an emergency loan.

  1. Zero interest credit cards. A 0% APR creditcard could be an excellent option for those with good credit. These cards offer interest-free financing up to 21 months for purchases and/or balance transfers. After the initial period, interest begins to accrue. Be sure to repay your balance by then.
  2. Get a home equity loan, or HELOC. Access your home equity with a home equity loan (HELOC) or home equity credit line. These loans are secured and use your home as collateral. HELOCs and other secured loans have lower interest rates than unsecured loans. Repayment terms are also longer so that you can afford the monthly payments.
  3. Family loans. You can get a loan for your family if you are in dire need of cash but don’t meet the criteria for traditional emergency loans. Borrowing money from your family can have its risks. Set clear expectations and repay them promptly.
  4. Repayment plans for medical expenses. Talk to your hospital to discuss a repayment plan. Many offer interest-free repayment plans that allow you to make monthly payments that are affordable. A settlement option is an option if you are in financial trouble. Some hospitals will pay less if you are able to pay the full amount upfront. This is because they get paid immediately.
  5. Nonprofit organizations. These nonprofits can also provide financial assistance, depending on your needs. For example, if your rent is due and you are behind on your payments or want to avoid a lien being placed on your house.
  6. Borrowing money can be difficult but you should exhaust all options, such as family, friends and negotiating with lenders, before turning to emergency loans. Emergency loans can be a cheaper option than payday loans, credit card advances, or title loans if you are running out of options. Consider all options and choose the best option for you.

Building an Emergency Fund

You may not have the time or money to create an emergency fund if you are in need of an emergency loan. It’s never too late for you to create one for future emergency situations. Aim to save at least three to six month’s living expenses as a minimum.

But, the Covid-19 pandemic showed that even a prolonged drop in income may not be enough.

  1. These are common ways to get extra cash to help you build an emergency fund if you don’t know how to begin.
  2. Automating your savings after you get paid can reduce the temptation to spend more money on your budget.
  3. Spending tax refunds instead of saving, economic impact payments or rebates can all help to boost your emergency fund.
  4. Cash back credit cards allow you to use your cash rewards to increase your emergency savings.

Your employer may withhold too much money from your paycheck to get you a tax refund. Adjusting your tax withholding may increase your monthly income but it will result in a smaller tax refund.

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