How To Get A Loan For Emergencies

What Are Emergency Loans?

As its name suggests, an emergency loan is something that can help you pay for unexpected expenses, such as:

• Utility bills
• Rent or mortgage payments
• Car repairs
• Home repairs
• Medical bills
• Funeral costs

Types Of Emergency Loans

Emergency loans can come in various forms and amounts to help you cover those expenses, such as:

• Personal unsecured loans (usually between $1,000 to $100,000) that use your credit history to make a lending decision.
• Secured personal loans backed by collateral like a car or real estate.
• Title loans where your car title is handed over for cash. Should you fail to repay the loan, the lender can take your car.
• Payday loans under $500 with interest rates that can go beyond 400 percent APR. Although risky, they help people with bad credit who cannot get financing elsewhere.
• Credit card advances that offer cash via your available credit balance.

What’s your best bet for an emergency loan? If you can get one, personal unsecured loans are a solid choice since they offer quick cash, favorable interest rates and terms depending on your credit, and sufficient funding to cover various expenses.

How To Pick An Emergency Loan

Since emergency loans come in different forms, you may be wondering how to pick the right one for your needs. To make that decision, consider the following:

• Interest rates – You want the lowest interest rate, so you don’t get stuck paying off a costly loan and go deep into debt. Luckily, many lenders let you prequalify so you can see what’s available for your specific financial situation as you shop around.
• Fees – Some lenders charge origination fees, late fees, and prepayment penalties that can add to the loan cost.
• Requirements – Do you have good credit? A personal unsecured loan is a strong possibility. If your credit is bad or nonexistent, though, you may have to turn to a payday loan or put up some collateral.
• Terms – A payday loan requires repayment within two weeks from your next paycheck.
• Personal loans can be repaid over several years, giving you more manageable monthly payments.
• Time – You’ll probably need the cash quickly if it’s for an emergency. Payday loans can be funded in minutes, but personal loans are also quick with same-day or next-day funding, depending on the lender.

The Steps To Getting An Emergency Loan

Your mileage may vary depending on your credit situation and lender, but here are the typical steps to getting an emergency loan:

1. Get your free credit report to check your credit score and see where you stand.
2. Improve your credit score, if necessary, to get the lowest interest rate and best terms.
3. Figure out how much money you need to borrow.
4. Shop different emergency loan options via online lenders like Avant, LightStream, Rocket Loans, SoFi, Upgrade, and Prosper or banks and credit unions to see what you prequalify for.
5. Apply for the emergency loan and await your decision, which could take minutes to a few days.