Best Emergency Loans for Bad Credit

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Emergency Loans for Bad Credit

Emergency loans are possible for people with less-than-great credit scores from lenders willing to take on the additional risk.

Emergency loans for bad credit may come with a higher price tag, but the money is available to help with your needs. Borrowers may believe that just because their credit score is not the best that they can’t get help when they need fast cash. The best emergency loans offer fast financing, low to no upfront fees, low approval requirements and competitive rates. Often, cash is available the same day or the next business day for approved borrowers.

 

4 best emergency loans for bad credit of 2020

OneMain Financial – Best for fast approval

When you need money fast, you don’t have time to wait weeks or sometimes even days. OneMain Financial provides emergency loans available the same day for up to $20,000. The online application process is streamlined, and you can get an approval decision in less than 10 minutes. Same-day funding is provided by ACH or by check at a branch location. Be aware that ACH transfers can take a few days, so if you need the money immediately, you should choose the check option.

One thing to be aware of is the company does require applicants to visit a branch location after pre-approval is completed online. If you aren’t close to a branch or aren’t able to make it in, OneMain Financial might not bet the best option.

RISE Credit – Best for no credit

If you have no credit or have some mistakes in your credit report from the past, RISE may be able to help. The company says, “For the millions of working Americans who have limited access to lower-cost credit products, RISE is a smarter credit option.” 

While the money from RISE is significantly more expensive than other options, the company is able to work with borrowers struggling to get approval elsewhere. Size-wise, loans are smaller, capping out at $5,000 but are also available starting at $500, making them ideal for less expensive needs.

Funds can be made available as soon as the next business day. Rates, repayment terms and borrowing limits will be dependent on your state of residence and what the local laws allow. RISE emergency loans also come with free credit score alerts, educational resources and the ability to earn lower rates with on-time payments.

Avant – Best for bad credit

Emergency loans are available to consumers from Avant up to $35,000 with repayment terms from two years to five years. If you need fast cash, you can get money deposited into your account by the next business day. Rates are competitive, but do be aware that loans come with an administration fee of up to 4.75%. Applying online only takes a few minutes, and customer support is available with real people by phone or email. Avant also offers a mobile app to help you make payments and track the status of your loan.

The company states on its website that the average credit score of its customers is in the 600 to 700 range. That being said, the company is willing to work with those that are below the average threshold. You will end up paying a higher interest rate, but you may have a better chance of approval. 

Upstart – Best lending network

Upstart emergency loans offer some of the most flexibility in options on the market. Loans are available up to an impressive $50,000 with lower rates and no prepayment penalties. The only area of Upstart where options lack is with repayment terms that are set to either three years or five years. 99% of Upstart applicants received funding in one business day after accepting their loan.

What’s nice about Upstart is the company looks at more than just your credit score when making a lending decision. The company looks at your standard creditworthiness factors, as well as your education, areas of study and job history. This gives borrowers a much better chance of approval and potentially better bad credit loan rates by looking at the whole person instead of just a number.

Compare the 4 best emergency loans for bad credit of 2020

Provider Loan Amount APR Terms
OneMain Financial $1,500-20,000 18.00-35.99% 2-5 years
RiseCredit $500-5,000 50.00-299.00%Varies by state
9.95% – 35.99% $2,000-35,000 6.27-35.99%2-5 years
Upstart $1,000-50,000 6.27-35.99%3 and 5 years

What is an emergency loan?

An emergency loan is a loan that someone takes out when they need access to fast cash to handle an unforeseen situation or emergency. Generally, these loans are unsecured personal loans, payday loans or cash advances that are designed to get people money quickly. Emergency loans have fast approval processes, clearly defined limits and have transfer methods in place to get you paid quickly.

You can get an emergency loan with bad credit, however, be aware that borrowing with bad credit generally involves higher rates and a more expensive borrowing cost. 

Types of emergency loans

Unsecured personal loan

An unsecured personal loan is the most common type of emergency loan available. These loans require no collateral and can provide higher amounts of money than other types of emergency loans. Generally, the repayment period on an unsecured personal loan is much longer (years instead of weeks), giving users a better opportunity to repay. Ideally, this is the best option for most people seeking quick cash for an emergency need.

Payday loan

A payday loan is a form of emergency loan that gives a borrower access to funds that are coming in a future paycheck. Generally, you’ll get your funds from your next check and be required to pay back the entire amount when the next paycheck is issued. The problem with payday loans is they are predatory in nature and can put borrowers into a debt cycle of always borrowing a few paychecks ahead. Additionally, the money is extremely expensive, and the loan is not designed with your best interests in mind.

Cash advance

If you have credit cards, you may be able to get a cash advance. A cash advance is when you withdraw cash on your credit card instead of swiping it. Generally, this type of transaction carries a much higher interest rate and a fee for processing. In other words, you are getting hit with higher costs all across the board. Compared to a payday loan, this is generally a much better option as you will have more time to make payments instead of just a few weeks. It’s not an ideal form of borrowing, but it’s much less predatory than payday loans.

Alternatives to emergency loans

Credit cards

When you’re not sure how much money you will need or if you expect to need multiple loans in the future, you may want to look into getting a credit card. A credit card gives you a line of credit, which can be used over and over again without reapplying. Additionally, credit cards only charge you on the money you actually use. Other forms of emergency loans (like payday loans, unsecured personal loans and cash advances) charge you whether you use the money or not.

Payday alternative loans (PALs)

If you’re running low on options and considering a predatory payday loan, there is another option to consider. The federal government partnered with some credit unions to offer payday alternative loans, which carry the positives of a payday loan without the predatory nature. PALs have safeguards in place to help prevent borrowers from falling into a debt cycle that they may never recover from.

Friends and family

When you have no other options and can’t get approval, you may need to turn to friends and family for help. While this option might not be available to many, it could be an option for some. Make sure, though, you are clear and upfront about expectations, repayment and borrowing terms with your family. The worst thing that can happen is you sour a personal relationship over money.

The final word 

While you can get an emergency loan with bad credit, keep in mind the costs that are associated with your bad credit. Unfortunately, bad credit lenders have higher interest rates, lower maximum limits and even fees associated with loans. As long as you repay the loan used to fund your emergency, then your credit could improve and expand your borrowing options in the future.

Jason Lee

Jason Lee is a U.S.-based freelance writer with a passion for writing about dating, banking, tech, personal growth, food and personal finance. As a business owner, relationship strategist, and officer in the U.S. military, Jason enjoys sharing his unique knowledge base and skillsets with the rest of the world.