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Emergency Loans

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The unexpected happens to everyone. And sometimes, the unexpected comes with an alarming price tag. An emergency loan can help you deal with a sudden and real need for cash.

What is an emergency loan?

An emergency loan is a loan that can cover unexpected expenses, like:

  • Car repairs
  • Home repairs
  • Legal expenses
  • Medical bills
  • Pet medical bills
  • And more

Emergency loans can be for personal or business use. Emergency personal loans are usually for a relatively small dollar amount. Emergency business loans are sometimes larger.

In either case, an emergency loan can help you bridge the gap between an urgent situation and stable finances.

How do I get an emergency loan?

The path to the right emergency loan program is different depending on why you need it and what your credit standing is.

Here are some of the options you can explore if you're looking for an emergency loan:

You can also look for loans specific to your situation, such as:

If your credit isn't very high, you might also want to look at:

We'll go into some more options in greater detail in the next section.

Types of emergency loans

Here are the most common loan options you can apply for in case of emergencies.

Unsecured personal loan

An unsecured loan is for someone with verifiable income and who can meet the lender's minimum credit score and debt-to-income requirements. The loan term varies.

Secured personal loan

A secured loan is for a borrower who has a valuable asset that they can use as collateral, such as a certificate of deposit (CD) account.

Normally, this loan application requires proof of income because even with assets, you need to show that you can afford the monthly payment. The loan term varies.

Payday loan

If you have verifiable income and recent pay stubs, a payday loan is available on a walk-in basis with no credit check.

A payday loan is a short-term loan with very high fees and is known as a predatory loan. Many payday loan borrowers become trapped in a cycle of debt that is difficult to break. The average payday loan borrower renews their loan eight times. The loan term is usually between one and four weeks.

Learn More: What Is A Payday Loan?

Payday alternative loan (PAL)

If you have a job and are a member of a participating credit union, you might be eligible for a payday alternative loan (PAL).

Not all credit unions offer it, but those that do cap interest at 28%, which is a fraction of the cost of a storefront payday loan. The loan term is usually a few weeks or less.

Title loan

A title loan is for someone with a car, truck, motorcycle, RV, or boat that they are willing to offer as collateral against the loan.

Like predatory loans, this loan option typically has very high fees and a short loan repayment period. If you don't repay the loan, you give up your right to the vehicle. The loan term is usually one to six months.

Credit card cash advance

If you have a credit card and it isn't maxed out, you may be able to take a cash advance against it.

Many credit cards allow you to borrow money. The cash advance limit is often lower than the credit limit for purchases. You might pay a fee to get the cash advance, and there is no interest-free grace period. You'll owe interest starting the day you take out the cash.

The interest rate for cash advances is often higher than the interest rate for purchases, but it's lower than the rate for most payday or title loans. The loan term is whatever amount of time it takes you to pay off the balance.

Small Business Administration (SBA) disaster loan

Small Business Administration (SBA) disaster loans are for homeowners and renters in addition to business owners.

The Small Business Administration provides personal loans and business loans to people who need help recovering from declared disasters, including civil unrest and significant acts of nature. The loan term is typically several years or longer.

Specialty loan (such as dental or veterinary)

Healthcare and veterinary care loans are for people who have expenses related to things like dental or pet care emergencies.

Your provider may even give you a brochure with information. Typically, these are deferred-interest loans. That means if you pay off the balance on schedule, you could pay little to no interest. But if you don't, you'll owe interest on the entire amount (even the portion you've already paid off).

This loan might also be available for medical care expenses, including elective procedures. The loan term is usually six months to three years.

SBA Economic Injury Disaster Loan (EIDL)

Business owners can apply for economic injury disaster loans (EIDL). This was a popular form of financial relief from COVID hardships.

The Small Business Administration's EIDL is for small businesses and nonprofits experiencing a temporary loss of revenue. The loan term is typically several years or longer.

Private emergency business loan

Business owners can apply for emergency business loans from private lenders.

Many online and brick-and-mortar lenders offer emergency business loans. This type of loan may be based on pending customer invoices, on future sales forecasts, or on the business owner's credit rating. The loan term varies.

Choosing the right type for you

Not sure which type to choose? The below table shows requirements and costs for each loan type.

Loan type Credit check required Personal use Business use Typical cost
Unsecured personal loan Yes Yes Sometimes 8% to 36% APR
Secured personal loan Sometimes Yes Sometimes 8% to 36% APR
Payday loan or storefront cash advance No Yes Not usually 400% to 1,000% APR
Payday Alternative Loan (PAL) No Yes No 14% to 28% APR
Title loan No Yes Sometimes 36% to 800% APR
Credit card cash advance No Yes Yes 18% to 36% APR
SBA disaster loan Yes Yes Yes 3.75% APR
Specialty loan (such as dental or veterinary) Yes Yes No 0% to 36% APR
SBA Economic Injury Disaster Loan (EIDL) Yes No Yes 3.75% APR
Private emergency business loan Yes No Yes 6% to 36% APR

Plan for the unexpected

There's no use wondering if the unexpected will happen. It will. Sometimes, life's curveballs are simply unavoidable. That's true for us all, whether it's a divorce or a medical emergency. One way you can be prepared is by creating an emergency fund. Use our emergency fund calculator to see how much cash you should have saved.

If an emergency caught you off-guard recently, don't feel bad -- it happens to everyone. Look at the best loan options for you, get back on your feet, and don't forget to prepare for the next curveball of life.

Need a loan? Check out The Ascent's guide on how to apply for a personal loan.

The Ascent's best personal loans

Looking for a personal loan but don’t know where to start? Our favorites offer quick approval and rock-bottom interest rates. Check out our list to find the best loan for you.

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