Best Emergency Loans – Help in a Pinch
When you need money quickly for unexpected expenses, there often isn’t much time to compare the costs of emergency loans. The refrigerator is broken. A hospital emergency room bill is due. Or maybe you just need some money for groceries until your next payday.
Emergency expenses happen and if you don’t have an emergency fund, an unsecured personal loan can be a lot cheaper than a payday or auto title loan. Personal loans can be funded as soon as the same day you apply.
They can have high-interest rates, making it worthwhile to do a little online shopping to compare rates and repayment terms. If you have a poor credit score, your interest rate could be higher than it might be otherwise, but you can choose a loan for 2 years or more to pay it back, though that will lead to paying more for the loan.
Here are some of the best emergency loans that we’ve found. They’re available for a range of credit scores, so find out what your score is before applying.
- Overview of the best emergency loans
- Summary of the best emergency loans
- Can I get a credit union loan for emergencies?
- What other types of loans can I get?
- Why you should use emergency loans
- Why you shouldn’t use emergency loans
- The bottom line
Overview of the best emergency loans
|OneMain Financial||No minimum credit requirement|
|Best Egg||Good credit|
|Rocket Loans||Fast funding|
|Possible Finance||Only small loans available|
Best emergency loans
Avant has the lowest minimum credit score requirement of all of the lenders we reviewed. It also can fund loans quickly, within 1 business day. Loan terms range from 2 to 5 years,
A minimum credit score of 550 is needed to qualify for a loan from Avant. A 550 FICO score is considered poor. Bumping your score up to 580 to enter the “fair” range will likely get you a better interest rate. The company says most of its customers have a credit score between 600 and 700.
On-time payments on its installment loans are reported to the three major credit bureaus — Experian, Equifax, and TransUnion — which should raise your credit score.
One downside of an Avant loan is its hefty 4.75% administration fee. The fee is subtracted from the original loan amount, leaving you with less money than you may have expected to borrow.
The company gives the example of a $5,700 loan repaid in 36 monthly installments of $230 at an annual percentage rate, or APR, of 29.95%. For the 4.75% fee, $271 is paid to Avant and the borrower gets $5,429. The original $5,700 is still the amount being financed. The interest paid is $2,580.
If you need an emergency loan and your credit score is so low that you’re not even considering applying for a loan, then OneMain Financial might be able to help if you can’t qualify elsewhere.
It doesn’t set a minimum credit score for loan approval, though the average score of its customers is 600-650.
Credit history is just one part of determining eligibility for a personal loan. OneMain is mostly looking at your ability to repay a loan. Factors beyond a credit score that it considers include:
- Financial history
- Income and expenses
- Loan purpose
- State or residence
- Sufficient income after monthly expenses
The downside of its loans, however, is that the starting APR it charges, 18%, is among the highest starting loan rates we found among emergency loans. OneMain also has high origination fees, up to 10%. The origination fee may be a flat amount, depending on the laws in your state, and range from $25 to $400.
Larger loan amounts are secured loans that are basically title loans. Your vehicle will be used as collateral. A vehicle used as collateral will help borrowers qualify for loans, as will adding a co-applicant in the application process.
Fair credit is needed to qualify for a loan at Upstart, which uses artificial intelligence and nontraditional data in underwriting loans.
These methods help younger applicants who may not have much of credit history, if any at all, and might not qualify at lenders for emergency loans. Having a high earning potential helps improve approval chances, and the minimum gross income to qualify for a loan is $12,000.
Applicants must have a full-time job or start a job starting within 6 months, or a regular part-time job or another source of regular income. College education, job history, and residence are also used to evaluate borrowers.
Most of its loans are funded just 1 business day after signing.
A big downside to an Upstart loan, however, is that it charges an origination fee of up to 8%, along with other fees. It also doesn’t allow borrowers to qualify for lower interest rates by adding a co-signer, co-borrower or adding collateral for a secured loan.
The unsecured loans that Best Egg makes don’t have prepayment penalties, which is good because the minimum loan term is for 3 years. Paying off a loan early without a fee means paying less interest.
The minimum loan amount starts at $2,000, so the emergency you’re paying for will have to be a little heftier than a weekly grocery bill.
Best Egg specializes in providing emergency loans for people with good credit, starting with a minimum credit score of 640.
The company has some of the lowest APRs around. However, to qualify for its lowest APR a minimum 700 FICO score is needed and an individual annual income of at least $100,000 is required. If you’re earning that much money and need an emergency loan, it’s time to start an emergency fund.
Along with a minimum credit score requirement, Best Egg has other requirements that help ensure borrowers with at least good credit qualify for their loans. While it doesn’t have a minimum income requirement, the average borrower earns $80,000 annually. Other minimum qualifications include:
- Credit history of 3 years and three accounts
- Enough cash flow to cover current financial obligations
- Debt-to-income ratio of 40%, or 65% if a mortgage is included
- Proof of income
Rocket Loans offers same-day funding on some loans, so if you need cash immediately, it may be able to help.
A soft credit check is done when prequalifying through an online application, which won’t hurt your credit score.
While same day loans are possible, the company says 85% are funded the next business day. Some can take as long as 3 business days to fund. Same-day funding is available on loans up to $25,000 if the loan process is completed by 1 pm. ET. Your bank, however, may have rules limiting if money will be credited to your account on the same business day.
Rocket Loans provides a 0.03% discount for borrowers setting up automatic payments on their loans. It won’t save you a ton of money, but it’s better than what other lenders offer, which is nothing.
Most personal loan providers require a minimum loan amount of $1,000. Oportun starts loans at a much lower amount of only $300 and has loan terms of 6 to 46 months.
The company focuses on helping low- to moderate-income applicants with little to no credit history. Instead of focusing on a credit score, Oportun’s loan approval is based on income, expenses, payments for utility and cell phone bills, and how much money the borrower has at the end of the month. However, if you have a credit score, it will be considered in an application.
Its interest rates are high, but still below 36%, and considered low for lenders that don’t require a credit score. It doesn’t give a rate discount for autopay, and it doesn’t have a prepayment fee.
Oportun has a hardship program to help borrowers having a hard time making payments after a job loss, medical bills after an emergency such as the coronavirus, natural disaster, or other emergencies. Payments may be deferred or the loan can be rewritten to a lower interest rate and monthly payments, and the repayment term may be extended for customers who qualify for the program.
The company’s website isn’t totally transparent. A disclaimer says an origination fee may be charged, but we couldn’t find the amount listed.
LendingPoint points out that it makes personal loans for people with fair credit. For a FICO score, fair is between 580 and 669. LendingPoint requires a minimum credit score of 585, though its borrowers average a score of 670.
It offers flexible payments in a few ways. Borrowers can choose the payment due date and set biweekly or monthly payments when they set up a loan. LendingPoint loans can also be refinanced at a lower rate if rates drop later.
Customers having difficulty making a payment can ask for temporary help to delay payment for up to 2 weeks without a fee.
It only offers secured loans. It doesn’t offer an autopay discount, and it doesn’t have a prepayment penalty. Money can be received by the next business day after a loan has been approved, though it can take 1 to 2 days for approval.
PenFed Credit Union offers unsecured personal loans that can be used for emergencies at rates starting at 6.49% APR. A fair credit score and a stable source of income are required.
Some of the best news is that it doesn’t charge origination fees. The amount you borrow is the amount of money you’ll get, saving you hundreds of dollars in fees. PenFed also has no early payoff fee.
You must be a member of PenFed to borrow from it. Formally called Pentagon Federal Credit Union and headquartered in McLean, Va., membership requires having some sort of relationship with the military. You don’t have to serve in the military to be a member but can just donate to a group that supports the military to join the credit union.
It is one of the few online lenders that has a low loan amount requirement, starting at $500. That may be enough to cover many emergencies. Repayment terms start at one year, allowing borrowers to pay off emergency loans quickly.
Hopefully, you’ll never need an emergency loan this big, but LightStream offers personal loans from $5,000 to $100,000 with loan terms from 2 to 7 years.
You’ll need a good credit score or much better, along with autopay, to get its best rates. And you’ll need to borrow a lot of money to get its best rate of 2.49% since $10,000 is the minimum loan amount for its lowest rate. Interest rates for $5,000 loans start at 4.99% APR.
Having excellent credit will help you qualify for those best rates.
Loan approval and funding can happen on the same day. LightStream doesn’t charge origination fees, as many lenders do, and it allows joint applications to help make it easier to qualify.
If you’re shopping around for loans, LightStream will match any lender’s APR and then drop its rate by 0.1% if you qualify for a loan from the other lender with the same terms.
Possible Finance considers its personal loans as alternatives to payday loans for people with bad credit, but it charges such high-interest rates that its loans might as well be payday loans.
It doesn’t list its interest rates on its sites, but other sites have computed them to be in the triple digits. Possible Finance only operates in eight states, and on its license page for California, where the maximum loan it can offer is $250, it gives a sample rate of 178% APR for a 56-day loan.
It charges a flat origination fee of $15-$20 for every $100 borrowed. Up to eight weeks is allowed for repayment, and payment is due every 2 weeks. Payments can be deferred for up to 29 days past the original due date with no additional fees, interest charges or impact on credit scores.
Borrowing $200 for a car repair, for example, can require a bi-weekly payment of $57.50, for a total repaid amount of $230. That’s only $30 in interest to borrow $200 for eight weeks, but it equates to a 151% APR.
If you need a few hundred dollars in a few minutes, Possible Finance can help with funding on its mobile app in about 60 seconds. Funds can be given to you instantly through a debit card, or in 1 to 2 business days through a bank transfer.
Unlike traditional payday loans, Possible Finance helps you build your credit history by reporting your payments to the three major credit bureaus. No credit score is needed to get a loan from Possible Finance, and even a bad credit score is OK.
Summary of the best emergency loans
|Lender||Minimum credit score||APR||Loan amount||Origination fee|
*Note: Information is accurate as of Dec. 14, 2002. Some rates require having autopay. Check lender websites for latest interest rates, fees and other requirements. *
Where can I get the quickest emergency loan?
Some lenders, such as Rocket Loans, offer same-day funding. The quickest that most lenders can give you the money you’re borrowing is one business day after your loan has been approved.
Rocket Loans can fund loans up to $25,000 on the same business day if the loan process is done by 1 p.m. ET. However, your bank may not provide the transferred funds to you as quickly, and you may have to wait a day. Rocket Loans ays 85% of its loans are funded the next business day, and that it can take up to 3 business days to fund a loan.
Can I get a credit union loan for emergencies?
Credit unions are not-for-profit lenders whose main goal is saving their members money. Emergency loans can be among their services, and they’ll often consider more than your credit history when approving a loan.
PenFed is one credit union we recommend, but there may be others in your area or you may already belong to another credit union.
PenFed allows applicants who don’t qualify for a loan to add a co-signer, which is something that not all personal loan companies do. It also allows borrowers to defer one payment each year and to change the payment due date annually.
What other types of loans can I get?
Personal loans with set, monthly payments aren’t the only types of loans to help you get through an emergency.
__Payday loans. __There are payday loans, which can have APRs of 400%, according to the Consumer Financial Protection Bureau. These are usually the most expensive types of loans and should be avoided, if possible.
Cash advances. Credit card cash advances are another option. They can come with multiple fees, such as 3-5% of the amount borrowed from your credit card issuer, and fees from the bank or ATM owner where you’re getting the money from. Credit card interest rates on cash advances can be as much as 36% APR.
Title loans. Title loans are another short-term loan option. Your car’s title is used as collateral for a short-term loan. If you don’t repay the loan, your car could be seized by the lender.
Why you should use emergency loans
Emergency loans such as personal loans that can be paid in the same installment amounts each month can be a smart idea if you can afford the payments and can pay them off quickly. Less than a year is a good way to pay less interest.
Sometimes it can be difficult to get your hands on some extra money for a broken car or other emergencies that pop up. Emergency loans can help fill that one-time need.
Why you shouldn’t use emergency loans
Because of their often high-interest rates, emergency loans shouldn’t be used often. You don’t want to get in a habit of extending them or borrowing from them often.
If you do, then you’ll likely get into more debt and may have a hard time digging out of it. Going to an emergency loan too often is a sign that you either need a higher income or need to create a budget.
It can also be a reminder to start putting money into an emergency fund, even if it’s just $100 a month, to help you when a financial emergency happens. And chances are that it will someday.
The bottom line
An emergency loan can be a fast way to get money for a hospital visit, car repair, or other emergencies.
The interest rates can be high, especially if you have bad credit, though long loan terms can make the payments manageable.
Just try not to use them too often. A better solution is to start an emergency fund of your own, hopefully with enough money to fund 6 months or so of living expenses in case you lose your job.