Best Emergency Loans of December 2023

When emergencies happen, financial stress can make a bad situation worse. The best emergency loans provide quick access to cash during hard times, without ultra-high interest costs or fees attached. It’s important to know which type of loan you’re getting before you apply, as not all emergency loans are created equal, and some are much better for your long-term financial health than others.

A personal loan for emergencies is usually the best option as your standard APR is typically lower than other types of loans such as a title loan, payday loan, cash advance app, and credit card advance.

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Best emergency loans

Waiting is the worst when you need money now. These emergency loans are all personal loans that can be funded as soon as the same day you apply, or the next day following your application’s approval.

Methodology

Credible evaluated the best personal loan lenders for emergency loans based on factors such as customer experience, minimum fixed rate, maximum loan amount, funding time, loan terms, fees, discounts, and whether cosigners are accepted. Credible’s team of experts gathered information from each lender’s website, customer service department, directly from our partners, and via email support. Each data point was verified by a third party to make sure it was accurate and up to date.

How to compare emergency loans

When you compare emergency loans, consider the following:

• APR: A loan’s annual percentage rate, or APR, tells you how much you’ll pay annually on interest and fees, expressed as a percentage. The lower the APR, the less it’ll cost to borrow.
• Loan amounts: You can find loan amounts ranging from as low as $600 up to $100,000. Lenders for payday loans typically offer $500 or less but come with high APRs.
• Terms: Depending on the type of emergency loan, terms can range from one to seven years. The shorter the term, the higher your monthly payment will likely be.
• Funding time: Look for a lender that offers fast funding. Some lenders can finance your loan as soon as the same or next business day.
• Lender’s reputation: Be sure to check out customer reviews before choosing a lender. Consider predatory lending signs such as exorbitant high interest rates and no credit check. If many previous customers have had negative experiences working with a lender, that may be a red flag.

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How do emergency loans work?

Emergency loans refer to a few different types of loans you can use to access cash quickly during an emergency. They’re typically unsecured, which means you don’t need collateral to secure the loan. You can use an emergency loan for almost any purpose, such as car repairs, a large purchase, or medical expenses.

Here are the different types of emergency loans:

• Personal loans: A personal loan is a monthly installment loan that’s typically unsecured. Qualification hinges on your credit score, income, and other financial factors. If you qualify, you’ll receive a lump sum for the loan amount. Then you’ll pay it back, plus interest, in monthly payments over the loan’s term.
• Payday loans: A payday loan is a short-term loan for a small amount of money — typically no more than a few hundred dollars. But they’re known for astronomical APRs — sometimes as high as 400%. In most cases, there are better loan options.
• Title loans: A title loan is a short-term loan that uses your vehicle title as collateral. Typically, loan amounts are for up to 50% of your car’s value. These are some of the most expensive emergency loans, with APRs of up to 300% — and they’re not legal in every state.
• Credit card cash advance: A cash advance from your credit card allows you to withdraw cash in a pinch. But you’ll have to pay extra fees, and this service may have an even higher interest rate than your regular APR. Interest typically accrues immediately.
• Cash advance apps: Cash advance apps allow you to borrow small amounts from your upcoming paycheck before you receive it. While convenient, it can be an expensive way to borrow. These apps sometimes charge subscription and other types of fees rather than expressing costs as APR, and these fees can add up.

Qualifications for emergency loans

Generally, you may have to meet certain eligibility requirements before applying for a loan. Eligibility requirements vary by loan type and lender, but lenders typically consider the following:

• Credit score: Most lenders consider your FICO score when assessing your loan application. At the very least, you usually need a credit score in the “fair” range or above — that’s a score of at least 580. But certain emergency loans, like payday loans or title loans, may not require a credit check.
• Income verification: To qualify for many loans, you may be required to prove you have a stable income. This helps show lenders you’ll have the cash on hand to pay back a loan.
• Debt-to-income ratio (DTI): Your DTI measures your monthly debt payments against your gross monthly income, and is used when determining your loan eligibility. Most lenders require a DTI of around 36% or less.
• Collateral: If you apply for a secured emergency loan, you’ll need collateral. In the case of a title loan, this would be your car title.

How to apply for an emergency loan

The process for getting an emergency loan varies by loan type. Title loans, payday loans, credit card cash advances, and cash advance apps often have a simpler, quicker process for getting cash.

When it comes to applying for a personal loan, however, you’ll have to do a little more legwork to apply and qualify:

1. Check your credit: Your credit score plays a big role in the type of loan you can qualify for, so it’s important to know before comparing loans. Plus, checking your credit report gives you a chance to make sure there are no mistakes negatively impacting your score.
2. Compare lenders: Rather than applying for the first loan you see, take time to compare lenders. Even a small difference in the interest rate can equate to huge savings over the life of a loan. Pay attention to things like funding time, fees, terms, and a lender’s reputation, too.
3. Apply for a loan: Most lenders allow you to apply for a loan online. You’ll need to provide your personal and financial information, plus income verification.
4. Finalize the loan and begin payments: Once you receive a loan offer, read the loan agreement carefully before signing. After receiving your funds, you’ll begin making your monthly payments. 

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Alternatives to emergency loans

Sometimes an emergency loan isn’t the best way to pay for unexpected expenses. If you’re looking for an alternative to an emergency loan, consider the following:

• Payday alternative loans: Accessible to members of federal credit unions, payday alternative loans are affordable short-term loans of up to $1,000. Application fees are capped at $20, rates are capped at 28%, and terms can last up to six months.
• Credit card purchase: Depending on the size of the emergency, you may be able to cover it with a simple credit card purchase. Credit card interest rates can be high, though, so try to not put a charge on a credit card you won’t be able to pay off quickly.
• Help from family or friends: If you have family and friends willing to help you out in a financial emergency, you may be able to avoid the costs of borrowing. When taking a loan from friends or family, it can help to put repayment terms in writing.
• Paycheck advance: Paycheck, or payroll, advances are a type of short-term loan that allow you to borrow against your next paycheck, then pay it back out of a future paycheck or in a series of installments. But not all employers offer this service.
• Personal line of credit: A personal line of credit is similar to a credit card — you can borrow against it as needed and have to make minimum payments each month. You often need to have a checking account at a bank or credit union in order to open a personal line of credit there.
• Financial assistance: Depending on your personal and financial situation, there may be assistance programs to help you during an emergency. Start by calling 211 to get connected with resources in your area.

Build an emergency fund

Certain situations may call for an emergency loan, but ideally you can set aside a cash buffer for emergencies. Here’s how to start saving for that emergency fund:

• Figure out how much you need to save: Many financial experts suggest setting aside three to six months’ worth of essential living expenses for emergencies. Calculate your monthly essentials, and decide on a target that’ll give you some peace of mind.
• Set a reasonable monthly savings goal: Setting a reasonable savings goal each month can keep you motivated when your goal seems out of reach. Even if you can only afford to save a little each month, set a goal and slowly increase it when you can.
• Set up an automatic transfer into a dedicated savings account: Make sure your savings actually make it into an emergency fund by setting up automatic transfers from your checking into your savings. To get the most bang for your buck, keep emergency savings in a high-yield savings account.

FAQ

Where can I get an emergency loan?

It depends on the type of loan you’re looking for. You can get personal loans at banks, credit unions, or from online lenders. You can get payday loans and title loans from companies specializing in these types of loans. You can also get a cash advance from your credit card company or use a cash advance app like Dave or MoneyLion.

How can I improve my chances of approval for an emergency loan?

You can improve your chances of loan approval by building your credit and lowering your DTI. However, these aren’t metrics you can improve overnight. If you’re looking for a quicker way to improve your chances of loan approval, you can apply for an emergency loan that allows cosigners, or you can apply for a secured loan.

What can I use an emergency loan for?

You can use an emergency loan to pay for a wide range of unexpected costs. For example, an emergency loan could cover emergency travel, urgent vehicle or home repairs, emergency vet bills, or other unplanned costs.

Can you qualify for an emergency loan with bad credit?

You might — it depends on the type of loan you apply for, your financial situation, and whether or not you apply with a cosigner. If you have bad credit, start by looking specifically for loans for bad credit. Keep in mind, these loans may have higher interest rates and fees. If you’re having trouble qualifying for an affordable loan, try applying with a cosigner or getting a secured loan.

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