10 Best Emergency Loans of 2022

What Is an Emergency Loan?

Most lenders don’t actively advertise “emergency loans.” Instead, they sell personal loans that you can use for emergency expenses, like medical bills, funeral arrangements, car repairs, and other urgent expenses. Once your emergency passes, you repay your debt over time, just like any other loan.

How Do Emergency Loans Work?

Emergency loans work like any other personal loan. You can apply online, in person, or over the phone at a bank, credit union, or online personal loan lender. The lender will approve or deny your loan based on factors like your income, credit score, and debt-to-income ratio. Some creditors also permit joint applicants or co-signers (though not all do). The best emergency loans also offer next-day or same-day funding.

However, emergency personal loans may come with high-interest rates – especially those that cater to bad credit borrowers. You may also face expenses like origination, late, and insufficient fund fees on top of your interest rate. And some lenders place restrictions on how you spend your money. (Excluding business and education expenses is common).

Where Can I Get the Quickest Emergency Loan?

The best way to get a fast personal loan is to hop online and find lenders that offer same-day or next-day funding. If you want to avoid costly fees and high APRs, you’ll want to shop around for affordable options.

Do Credit Unions Offer Emergency Loans?

Credit unions often offer emergency or other quick personal loans among their products. Many also promote “payday alternative loans” between $200 and $1,000, which are ideal if you need a small sum in a hurry. And while credit unions are often friendlier toward bad credit borrowers, many have membership or account age requirements to borrow.

How to Compare the Best Emergency Loans

#1. Rates and Fees  

Speed is often your priority in an emergency, but don’t neglect the financial consequences of your actions as a result. Consider a loan’s total cost before accepting a lender’s terms, including the interest rate, fees, and time spent repaying your debt.

#2. Funding Times

In an emergency, fast funding is often paramount. Lenders may take anywhere from a day to a week to fund personal loans. If they don’t make it clear online how long the process should take, don’t be afraid to ask a representative.

#3. Online Availability

In the digital age, just about everything happens online – and that’s doubly true post-pandemic. If your lender requires you to meet in person to close your loan, you may want to opt for one that’s more accessible.

#4. Credit Score and Income Requirements

Your credit score and income determine important features like your loan amount and interest rate. Unfortunately, if you have low income and bad credit, you’ll likely have a harder time getting approved. That said, you still have options, so be sure to rate shop until you find the most affordable lender for your situation.

Emergency Loans to Avoid at All Cost

#1. Payday Loans

Payday loans typically offer small amounts – under $1,000 or so – that you repay out of your next paycheck. Some may even request access to your bank account to withdraw the money you owe as soon as your check hits.

Instead of interest, they tend to charge fees per amount borrowed that may come out to a 400-600% APR. And because they don’t require a credit check, they tend to target bad credit borrowers who may not be able to afford other options – let alone their predatory terms.

#2. Pawnshop Loans

Pawn shops will pay out loans to borrowers willing to put up the junk around their house as collateral. But you won’t get anywhere near the item’s full value – rarely over 60% – and if you want your item back, you’ll have to repay your loan plus interest and fees. If you can’t afford to repay your loan, you stand to lose your valuables forever.

#3. Car Title Loans

Car titles loans require you to sign over the title of your car as collateral for a loan. But make no mistake – this isn’t like your regular auto loan or even a HELOC. Despite putting up collateral, car title loans still tend to charge triple-digit APRs, tons of fees that pile on top of your debt, and expensive “rollover” options to extend your loan when you can’t afford to repay it in full. Ultimately, if you can’t repay your debt, you risk both your credit score and your car title.

#4. Credit Card Cash Advances

Credit card cash advances are cash loans borrowed against the limit on your credit card. Interest rates on these advances trend higher than APRs for regular purchases. Plus, they often come with additional fees, including transaction and processing fees. And for most cards, interest starts piling on when you withdraw your loan – there’s no grace period like you have with regular credit card purchases.

What Are the Advantages of Emergency Loans?

Emergency loans come with several advantages, including:

• The potential for same-day or next-day approval
• Fast funding (usually)
• The ability to cover emergency expenses upfront
• An easy application process (usually)
• Credit reporting, thereby allowing you to build credit as you repay your debt

What Are the Risks of Emergency Loans?

But emergency loans aren’t risk-free. They also come with significant disadvantages like:

• Sky-high fees and interest rates
• The potential to lead to debt cycles, especially traditionally predatory loans like payday, title, and cash advance loans
• Loan Origination fees that eat into your total loan amount
• A hit to your credit score if you miss a payment or default

How to Get an Emergency Loan with Bad Credit

Bad credit scores don’t automatically disqualify you from getting a loan, but they do make the process harder – and more expensive. If you have a FICO score under 620 or so and need an emergency loan, you do have options. Just prepare to pay higher interest rates or origination fees for the privilege.

To make emergency loans more accessible as a bad credit borrower, you might also consider:

• Talking to your bank or credit union about getting a low-dollar, short-term loan
• Adding your savings account, CD, or jewelry as collateral to improve your approval odds
• Having a friend or family member cosign for your loan (just be sure you’re not at risk of defaulting and putting their credit on the line)

Consider Building an Emergency Fund

The best way to ensure you don’t need to take out a loan in an emergency is to build up a savings fund over time. Set a goal – such as 3 months’ worth of household expenses – and commit what you can afford every month. Even if that’s just $10 a week, that’s $520 a year you didn’t have before!

You might also consider automating your savings straight from your paycheck, so you aren’t tempted to spend the money immediately. While paying yourself first isn’t always easy, your future self will thank you.

Summary: Best Emergency Loans

• Upgrade: Best Overall Emergency Loans
• Upstart: Best Emergency Loans with Flexible Requirements
• OneMain Financial: Best Co-Signed Emergency Loans
• Best Egg: Best Emergency Loan for Fast Funding
• LendingPoint: Best Emergency Loan for Flexible Repayment Plans
• Avant: Best Bad Credit Emergency Loan
• Rocket Loans: Best Emergency Loan for Fast Funding Times
• FreedomPlus: Best Emergency Loan for Traditional Lending Experience
• SoFi Loans: Best Overall Emergency Loan
• Prosper: Best Peer-to-Peer Emergency Loans

Bottom Line: Best Emergency Loans

An emergency loan can get you through tough times – but the long-term financial consequences are very much real. Before committing to a loan, be sure to rate shop and read the fine print to ensure you’re not paying more in fees and interest than you have to. And when possible, avoid predatory lenders that promise same-day funding with no credit check.

Methodology

To select the best emergency loans, we reviewed 25+ lenders that offer personal loans for emergency expenses. Our evaluation included reviewing the lenders online experience, eligibility requirements, customer support, and funding times. Read our editorial guidelines and rating methodologies for quick loans to learn more about the integrity, transparency, and honesty of our reviews.

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