Emergency Loans: When Should I Get One?

Point of Interest

Emergency loans are available in multiple forms to help you bridge the financial gaps created by unexpected emergencies, no matter what the cause.

If you don’t own a crystal ball and don’t have the ability to see into the future, then you’re like the rest of us who can’t see what tomorrow may bring. When life throws you a curveball, you may be put into a tough and unexpected financial situation. Emergencies can happen anywhere and at anytime. These events often come hitched with an immediate financial need that you may not be prepared to handle. Knowing the options you have for emergency loans can help you to weather the storm and bridge the financial gap created. 

What is an emergency loan?

The phrase emergency loan is an overarching term used to represent the different financial borrowing tools that may be available in times of emergency. Typically, these loan options are available quickly, for smaller total dollar amounts compared to traditional loans and often with relaxed approval requirements. The most popular types of emergency loans are debt consolidation loans, fast cash loans, payday loans and payday alternative loans.

Types of emergency loans

Debt consolidation loans

A debt consolidation loan is a financial tool that allows borrowers to combine all of their existing loan debts into a single new loan with more favorable terms and often with better interest rates. Your new lender pays off all of your existing debt and lumps it together into a new single loan. The advantages of these loans are that you’ll only have one creditor to pay, and you can usually get a better interest rate and/or lower monthly payments.

Understand that debt consolidation is significantly different than debt settlement. Debt settlement is a technique for attacking debt that may leave you vulnerable to lawsuits from creditors and with a destroyed credit rating.

Fast cash loans

Another umbrella term you’ll see with emergency loans are fast cash loans. By nature, all emergency loans offer fast cash. However, there are some loan providers that specialize in delivering money in a very short period of time. In many situations, you can get a manageable interest rate on a personal loan, while still getting your money quickly. Typically, these fast cash providers can get money to you the same day you request it or by the next business day, assuming you qualify and get all necessary paperwork in on time.

It’s important to note that not all personal loans are fast cash loans. You’ll want to specifically check with each lender to see how quickly you can get your money. Some lenders to consider that offer fast-cash personal loans are LightStream, Discover and Upstart

Payday loans

The absolute last resort you should look at when you need emergency funding is a payday loan. These types of loans are often predatory in nature and risk sending borrowers into a never-ending spiral of debt. Payday loans advance you money from your next paycheck at a very high interest rate, upwards of triple-digits. When your check comes in, arrangements are made through auto-debit or a predated check to pay off the balance.

Before you choose to use a payday loan, make sure you’ve exhausted all other options. Try getting a credit card, borrowing from family and friends, asking for an advance from work or getting a personal loan. If all of these options fail and you have no choice, make sure you fully understand what you agree to before moving forward with a payday loan.

When should I get an emergency loan?

Emergencies don’t always have to be something as major as a car accident or a global pandemic like COVID-19. They can be, but financial emergencies can also be things like unexpected medical bills, the loss of a job, a broken home appliance or any other need you simply can’t ignore.

When you’re faced with these tough situations, you may need an emergency personal loan to help. Emergencies are unexpected by nature, but they typically don’t last forever. These quick financial solutions can help to bridge the financial gap until life returns to normal, and the emergency or crisis is averted.

Emergency loan providers


Emergency loans are available from LightStream with APRs starting at 5.24%. Loans are available from $5,000 up to $100,000 and can be used for a wide range of emergency situations. The loans from LightStream have no application fees, no collateral requirements and no prepayment fees. Funds for approved applicants can be made available the same day, making LightStream one of the quickest options available.


For those consumers with less-than-perfect credit, NetCredit may be a viable option for your emergency funding needs. Loans are available up to $10,000, with flexible repayment terms and APRs starting at 34.00%. The rates are considerably higher than you’ll find at other emergency loan providers, but the company does work with a much wider range of creditworthiness. If you’ve struggled to get approval at other fast-cash solutions, you may want to consider an application to NetCredit.

OneMain Financial

Emergency personal loans are available the same day as approval and application from OneMain Financial online or at one of the company’s over 1,500 locations. Loans are offered starting at $1,500 and cap at $20,000. The company does charge origination fees on personal loans, which span from $25 to $300 or 1% to 10%, depending on the state you live in. These loans may be good for a borrower looking to meet with a loan agent face to face.

Payday Loan Alternative (PAL)

Federal credit unions offer payday loan alternatives (PALs) that give a borrower between $200 and $1,000 with a one to six-month repayment period. During a six-month period, a borrower may get up to three separate PAL loans as long as the loans do not overlap and have not been rolled over.  These loans come with no credit checks, a $20 or less application fee and a maximum interest rate of 28%.

While this rate is higher than some other emergency loan options, it’s still lower than what you may get from a private payday loan lender. Additionally, the safeguards in place help to mitigate the risks of you falling into a debt spiral that you may have problems getting out of.