4 best emergency loans of 2021

Young woman standing by broken down car and waiting for assistance while holding her baby boy and talking on cell phoneImage: Young woman standing by broken down car and waiting for assistance while holding her baby boy and talking on cell phone

In a Nutshell

If you’re looking for an emergency loan, you probably need fast cash because of an unexpected expense. But many loans that promise easy, quick access to funds for emergencies can come with steep costs — and some choices are better than others. Learn more about our picks for the best emergency loan lenders and how to get an emergency loan with bad credit.

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If you don’t have enough in savings to cover an emergency expense, an emergency loan that gives you the money you need quickly may help.

You may have a number of options, depending on your credit health and the loan amount you need. But keep in mind that some emergency loans can have high interest rates, so you’ll want to calculate the costs and do your research before you commit.

We’ll discuss the different types of emergency loans that could be available to you, as well as some lenders to consider. We’ll also give you tips on how to navigate the borrowing process — and any other options you may have.



Our picks for the best emergency loan lenders

The lenders below all have a few things in common — they offer “traditional” personal loans rather than payday loans, which typically come with dangerously high costs. Our picks also provide potentially fast funding time and a range of options for how much you can borrow.

LightStream

Good for: People with strong credit

Pros

  • Competitive interest rates and “rate-beat” program
  • Straightforward application and fast response
  • No loan origination or prepayment fees

Cons

  • No prequalification option
  • May not consider those with little credit history

OneMain Financial

Good for: Secured loan option

Pros

  • On average, loans funded quickly
  • Considers more than just your credit score
  • Rewards program

Cons

  • Loans process must be completed in branch
  • Maximum APR is on the higher side

Earnin

Good for: Paycheck advance

Pros

  • No interest or fees, and tips are optional
  • “Balance Shield” feature can help prevent overdrafts from your bank account
  • App available for Apple and Android users

Cons

  • Eligibility based on how you’re paid or what work you do
  • Sacrifice some privacy by using app
  • Low withdrawal limits

Possible Finance

Good for: Small loan amounts

Pros

  • Only small loan amounts available — may help prevent overborrowing
  • Can help you build credit

Cons

  • High APRs
  • Not available in all states
  • Short repayment terms

What should I know about emergency loans?

Emergency loans can come in the form of unsecured personal loans, credit card cash advances, payday loans or even pawn shop loans.

Emergency loan funds can be deposited directly into your bank account — often within a business day or two of approval, depending on the lender and the details of the loan application.

To fully understand your options, make sure to do your research beforehand and read any fine print throughout the process.

5 types of emergency loans

If you need a loan in an emergency, there are several options to consider. But what type of loan you qualify for can largely depend on your credit.

Personal loans

With good credit, you may qualify for an unsecured personal loan. Personal loans often have flexible uses for emergency situations. Personal loans are typically installment loans given out in a lump sum with a fixed interest rate. They could have better interest rates than credit cards and can be paid back over a set period of time.

You don’t need to borrow a huge amount, either. If you need a small amount of money, a small personal loan can help. For example, you could get a small personal loan of $1,000 to help you in a time of need. Just remember that you should take out only what you absolutely need and can comfortably afford to pay back. Of course, when times are especially difficult, “comfortably” may be a stretch. The idea is to borrow as little as necessary.

Credit card cash advance

A cash advance is essentially using the available balance on your credit card to take out a loan. The credit card company will typically charge a higher interest rate for cash advances than it does for normal purchases, plus a processing fee. Also, interest will start accruing on the advance when you take the money out, so be careful of how much money you request.

Payday loans

A payday loan is a short-term loan that typically must be repaid by your next payday. Unlike a personal loan, which is typically paid back in installments, payday loans are paid back all at once.

But be aware: Payday loans can have costs that amount to APRs as high as 400%, according to the Consumer Financial Protection Bureau.

The problem with payday loans is that they can lead to a debt trap. Many borrowers might not be able to pay back the loan — and are then stuck in a cycle where they continue to borrow in order to pay off debt. The CFPB reports that four out of five payday loans are “re-borrowed” within a month — often around the time when the loan is due — so you should only turn to this option as a last resort.

Pawn shop loans

For a pawn shop loan, you typically have to use an item of value to secure the loan. A pawn shop will assess the value of the item and keep it on hand as collateral to back the loan.

If you’re unable to pay back the loan, the pawn shop can sell your item. Because a pawn loan doesn’t involve a credit check or application process, it could be good for those with few traditional credit options.

Title loans

Another option is a title loan. If you’re a car owner, you can use your car’s title as leverage to access a short-term loan. This might seem like an attractive option since there typically isn’t a credit check involved. But there’s a chance your car can be seized if you aren’t able to repay the loan, so this option should be carefully considered.

Other options for dealing with a cash shortage

Before rushing to take out an emergency loan, you may want to consider some alternative options.

Low-interest credit cards

If you have good credit, you could qualify for a low-interest credit card with a 0% intro APR on purchases for a period of time. You could use this new credit card as a short-term loan and pay it back within the promotional period. Just remember that applying for a new credit card will initiate a hard inquiry, which can affect your credit scores. And you should only charge what you know you can pay off within the intro APR period — any leftover balance will begin to accrue interest if it’s not paid off in time.

Medical bill repayment plans

If you have an unexpected medical bill, you can talk to the hospital about repayment options. In many cases, a provider may work with you on a payment plan.

Some hospitals provide financial-assistance options specifically for under-insured or low-income families. Each hospital may have different financial assistance programs, so get in touch to see if you qualify.

Student loan payment restructuring

Federal student loan borrowers may be able to free up some money by opting for an income-driven repayment plan, which may make your monthly payments more affordable. This is a repayment plan that caps your monthly payment at a certain percentage of your discretionary income, which could lower your monthly payment amount. In some cases, you might qualify to pay $0 per month based on your income.

You can also consider deferment or forbearance to free up some money by stopping payments temporarily. Just be aware that depending on the types of student loans you have, your loans may continue to accrue interest while they’re in deferment or forbearance. So while you’re freed from making payments for now, your overall balance that you’ll need to pay back could continue to increase.

Home equity line of credit

You may also consider getting a home equity line of credit — often referred to as a HELOC. If you’re a homeowner, this is an option in which you use your home as collateral when applying for a loan. You’ll want to know the ins and outs of your repayment term, because you might be required to pay back the loan immediately after the draw period or have a set amount of time to pay it back.

Alternatives to emergency loans for bad credit

If you have less-than-perfect credit, you may think getting an emergency loan for bad credit — a loan with looser qualifying restrictions — is your only choice. But before you turn to a potentially high-cost solution, consider these other options.

Ask for a repayment plan

If you don’t want to take out a loan, you can try to negotiate a payment plan or a longer payment period for another bill. Creditors may offer you a low-interest loan or be willing to reduce the amount that you owe. It’s a good idea to talk with your current creditors before exploring other loan options.

Explore charitable financial assistance grants

Depending on your situation, you may qualify for an emergency assistance grant or loan. Some states and cities offer hardship grants to residents. For example, residents of Dane County, Wisconsin, can apply for emergency assistance grants if their family is facing eviction or foreclosure. Check with your state or local area to see what hardship grants may be available.

Ask your employer for a loan or advance

If you’re employed, your employer may be able to help you to bridge a short-term financial difficulty. Before you pursue an emergency loan, check with your employer to see if it can offer a loan or an advance on your next paycheck.

And if you’re a full-time or part-time federal employee, you may be eligible to receive a no-interest hardship loan of up to $1,500 through the Federal Employee Education and Assistance fund.

Use a credit card in your wallet

While credit cards can come with high interest rates, those rates are still usually less costly than other kinds of financing like payday and title loans. You also may be able to apply for a new credit card with a low or no-interest introductory APR offer.

Using a credit card might provide the short-term relief that you need. But if you do use one, make sure you have a plan to pay off your balance quickly, so you don’t accumulate too much interest.


Next steps: Start planning for your next emergency

If you need an emergency loan, you’re not alone.

But you can break the paycheck-to-paycheck cycle, and the way to get started toward that goal is to begin setting aside small amounts of money for emergencies.

Even setting aside $10 each paycheck can help. You can adopt a “pay-yourself-first” model, where you make sure some of your earnings go into a savings account each payday so you’re not tempted to spend more money on discretionary purchases.

Keeping your savings in a separate, high-yield savings account can help make it easier to keep these funds reserved for emergencies. The key is to save what you can consistently, so you have an emergency cushion for the future.


Worried about unexpected expenses because of the coronavirus pandemic?

If you’re worried about unexpected expenses because of the COVID-19 pandemic, you’re not alone. Below are summaries of relief measures that federal and state governments — as well as many lenders and credit card issuers — have put in place to help those who are struggling.  

Relief measures and other info

Tips for budgeting and paying down debt

If you’re looking for general tips on how to budget or navigate your financial challenges, we’re here to help with that, too. Check out some of our advice articles below. 


Hear from an expert

Q: What would you recommend for someone who needs a loan but has no credit?

A: In that case, they will need to provide sources of their income and the amount and other assets that can be used as collateral. Home title, car title can be used in lieu of no credit. 

Q: How can people in need of emergency loans find better alternatives?

A: In some cases, family members can help as well. Payday loans are OK, but since the interest rate they charge is rather large, those loans should be taken with that knowledge and repaid as fast as possible.

Dr. Miren Ivankovic, Adjunct Professor of Economics, Clemson University


About the author: Melanie Lockert is a freelance writer and editor currently living in Portland, Oregon. She is passionate about education, financial literacy and empowering people to take control of thei… Read more.