7 Emergency Reasons To Borrow Money

If you don't have an emergency fund to tap, you may need to borrow money to cover various emergency expenses, including home and car repairs, medical bills, or a vet bill for a furry pal.

One common solution is to take out a personal loan. These are generally unsecured and can provide money quickly — as soon as the same day you apply, in some cases. But other options, such as payday loans or car title loans, should be avoided, as they almost always have exorbitant fees and short repayment periods. 

Below are some common emergencies you might need to borrow money for, as well as some of the best loan types for each.

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1. Emergency home or car repairs

Some emergencies need to be addressed right away to prevent further damage to your property and pocketbook — like if a pipe bursts in your home, or you run into trouble with your car’s engine.

You could take out an emergency personal loan and possibly get funding as soon as the same or next business day after approval. If you need around $500 or less, consider a cash advance app — just check express funding fees. This is where these apps can get expensive. 

2. Emergency vet expenses

An unexpected vet bill for your animal companion can be pricey. A one- or two-day hospitalization can cost up to $1,500 for cats and up to $1,700 for large dogs, according to MetLife. If you can’t pay for this expense out of pocket or your pet insurance doesn’t cover it, you may look into a pet loan. If you're struggling to cover any upfront costs, such as for the office visit (aside from emergency pet surgery, etc.), consider a cash advance app for near-instant money. 

For a loan large enough to cover the bulk of your pet's vet bills, look to a personal loan. You can spread costs out over several years to keep them affordable, if necessary, and rates are much lower than credit card annual percentage rates (APRs), on average. Some lenders can send money the same day you apply, and some even offer pet loans for bad credit. 

3. Life events

If you experience a life event like losing your job, you may consider taking out an emergency loan to cover your bills until you find another one. Or, you may need to borrow money to pay bills if you’re self-employed and your income suffers a major drop. 

It can be more difficult to qualify for a low income loan. But applying with a cosigner or a co-borrower, or securing the loan with collateral could help. Also contact 211 for local resources in your community.

4. Debt consolidation

Debt consolidation involves combining your debt into a new loan, such as a personal loan, with a single monthly payment. You can use consolidation to make repaying debt more manageable or lower your overall interest rate.

Consolidating your debt might not be a typical emergency — unless you've realized you can't continue to afford your current debt payments or will have to make some big sacrifices to do so. For example, if you have overwhelming credit card debt that is eating into your savings, you may be able to pay down the balance with a debt consolidation loan and get a lower monthly payment. 

Depending on your credit profile, you may be able to get a lower interest rate than on your credit cards as well. The average rate for a 24-month personal loan was 12.49% in February 2024, compared to 21.59% for credit cards, according to the Federal Reserve.

Check Out: Debt Consolidation vs. Personal Loan

5. Medical bills

An unexpected medical emergency can be expensive, especially if you don’t have health insurance. The average cost for an inpatient stay at a community hospital was $14,101 in 2019, according to data from the Centers for Disease Control and Prevention.

If you can’t negotiate with your medical provider to lower the cost of a medical procedure to fit your budget or qualify for an interest-free payment plan, a medical loan could be a good solution.

6. Moving expenses

Moving expenses can set you back thousands of dollars, whether relocating for a job or another reason. The average cost for a local move is $1,250, while long-distance moves can cost more than $4,800, according to Moving.com. If you don’t have money saved up for the move, a moving loan can help.

7. Large essential purchases

An emergency loan can also help you cover large and expensive repairs. For example, you may need to take out one if your refrigerator or washing machine breaks down and it’s beyond repair.

Types of emergency loans

Several types of emergency loans exist, including:

Personal loans

A personal loan is a lump-sum installment loan you can get from a bank, credit union or online lender. They are usually unsecured, meaning you don’t have to pledge collateral to qualify. Loan amounts can range from $600 to $100,000 or more, depending on the lender, with typical repayment terms of 1 to 7 years. Personal loans can also come with origination fees from 1% to 12%. You can use a personal loan for a variety of reasons, including debt consolidation and emergency purchases.

Cash advance apps

Cash advance apps generally allow you to borrow a small sum of money to tide you over until your next payday. A major benefit of this option is that these generally don't require a credit check. But, while many of these apps don’t charge traditional interest, other fees like subscription fees, fast funding fees, and optional tips can quickly increase your cost to borrow.

You can usually borrow anywhere from less than $100 to $500 (or possibly more, depending on the app). Payment is typically due by your next paycheck.

EarnIn, Dave, and MoneyLion are some apps to consider for a cash advance.

Check Out: 5 Types of $500 Loans and How to Get One

Car title loans

A car title loan is a small loan that is secured by your vehicle. These also may have triple-digit APRs, and if you don’t repay the loan on time, the lender can repossess your car. You typically need to own the vehicle before you can use it as collateral for the loan and are generally limited to borrowing 25% to 50% of your car’s value. The loan is then repaid in 15 to 30 days with interest and finance fees that can amount to 25% of the loan amount.

Payday loans

Payday loans are small, short-term loans that don’t require a credit check. But the trade-off is that they come with significant fees, which translate into triple-digit APRs. Most payday loans charge fees from $10 to $30 for every $100 that you borrow. These loans are also limited in how much you can borrow, usually up to $500, and must be repaid by your next paycheck, which is usually 2 to 4 weeks. If you're considering a payday loan, use a payday loan calculator to see the true cost of the loan.

Payday alternative loans (PALs)

Some federal credit unions (FCUs) offer payday alternative loans to help consumers avoid taking out payday loans. The National Credit Union Administration (NCUA) caps the APRs of payday alternative loans at 28%.

The NCUA allows FCUs to offer two types of PALs: PALs I and PALs II. The NCUA doesn’t allow an FCU to issue more than one type of PAL to a single applicant at one time, however.

Here’s a table that breaks down some key differences between both PAL options.

How to borrow money for emergencies

Here are the steps you can take to apply for a personal loan for emergencies.

1. Prequalify: Many lenders, especially online lenders, allow you to prequalify for a personal loan without harming your credit. Prequalifying doesn’t guarantee approval, but it’s an easy way to get a sense of rates, amounts, and terms you could qualify for from different lenders. Your final rate may differ from the estimate.
2. Compare quotes: Once you've prequalified with multiple lenders (easiest to do via a personal loans marketplace), compare rates and terms based on your needs. For instance, you may only want to apply with lenders who offer same-day loans. 
3. Submit a formal loan application: After you find a lender that best matches your needs, complete a full loan application. By formally applying for a loan, the lender will perform a hard credit pull, which could temporarily hurt your credit.
4. Prepare documents: Depending on the lender, additional documents may be required before a decision, such as bank statements, pay stubs, or W-2s.
5. Receive your loan funds: If you are approved, you can often get your funds as soon as the same or next business day, though some lenders can take longer.

Check Out: How To Get Approved for a Personal Loan

When not to borrow money

If it's not really an emergency, consider whether a loan is necessary or if saving up for what you need is the better route. If you have a legitimate emergency and are struggling financially, you may want to consider alternatives first before committing to a loan. 

Alternatives to a personal loan

Using a personal loan to cover an emergency expense can be beneficial, but it isn’t the best option for everyone. Before you apply for one, explore these alternatives.

401(k) loan

If you have a 401(k) with a vested balance, you may be able to borrow from it. Your plan needs to allow loans, and you'll be limited to half of your vested balance or up to $50,000, whichever is less, in most cases. (Some plans let you borrow up to $10,000 if half your vested balance is $10,000 or less.) 

Since there's no credit check or minimum income requirements, getting a 401(k) loan may be especially worth considering if you're struggling to qualify for a loan elsewhere. Just know that 401(k) loans can get very expensive if you can't pay them back — you'll be taxed on the unpaid amount and may owe an additional 10% penalty tax. 

Plus, 401(k) plans are typically protected in bankruptcy, so may not be the best choice for debt consolidation if you expect to file. 

Check Out: 401(k) Loan vs. Personal Loan

0% APR credit card

Some credit card issuers offer cards with 0% APR promotional periods from six months to two years, depending on current promotions. With these cards, you can avoid interest if you repay your full balance before the introductory rate expires. 

The downside is that you’ll have to pay interest on any remaining balance once the interest-free period closes, and you need to be able to qualify for such a card. It’s best to only consider this option if you know you can pay down the balance before the 0% APR offer expires.

Learn More: Personal Loan vs. 0% APR Credit Card

Family or friend loan

If you must borrow money for an emergency, consider asking for a loan from a family member or friend. Just make sure to discuss a repayment timeline and put the details in writing, such as when repayment should start, how frequently you should make payments, and whether you'll pay interest. Then, pay what you borrow on time to avoid creating friction in the relationship.

Financial assistance programs

If you’re struggling to pay for emergency home repairs, rent, or food, you may qualify for a financial assistance program or grant. You can find organizations that offer help by searching the internet, visiting your local library or dialing 211.

Emergency reasons to borrow money FAQ

Should I build an emergency fund?

You should create an emergency fund because it can help you avoid needing to take out a future loan for emergency situations. Many experts recommend saving at least three to six months of expenses in an emergency fund. One way to start building one today is to open a high-yield savings account and deposit a set amount into it each month.

Can I get a personal loan with bad credit?

Yes, some lenders cater to borrowers with bad credit and have minimum credit score requirements as low as 550. If you are approved, however, a lender will likely charge you a higher APR and fees. To potentially qualify for a lower rate, consider applying for a personal loan with a cosigner — someone who agrees to make payments if you can’t.

Where can I get an emergency loan?

You can apply for an emergency loan with various financial institutions, including banks, credit unions, and online lenders. To get the best deal for your financial situation, compare rates, terms, fees, and funding times from multiple lenders.

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