What is an Emergency Loan?
An emergency loan is a short-term loan borrowed to pay for urgent expenses. It can be a car or home repair, last-minute travel, medical bills, rent payments, utilities, and many others. Depending on your purposes and opportunities, emergency loans can take a form of a personal, title, pawn shop, credit-builder, or payday loan.
Where to Apply for an Emergency Loan?
If you need cash urgently, consider the following places to get an emergency loan:
- Traditional banks;
- Credit unions;
- Credit cards;
- Online lenders.
Do Emergency Loans Affect Your Credit Score?
Some types of emergency loans impact your credit score, and others don’t. For example, banks, credit unions, and personal loan lenders report to three main credit bureaus (Equifax, Experian, and TransUnion) to check your credit report and how likely you are to repay a debt.
If you don’t repay an emergency loan, you can significantly hurt your credit and have problems with borrowing money in the future. On the other hand, payday lenders don’t perform a hard credit inquiry. Instead, they perform a soft credit check, which doesn’t impact your credit score.
How to Get an Emergency Loan with Bad Credit?
While you are likely to be denied in a traditional bank with a bad credit score, you can still apply for an emergency loan through online lenders. Bad credit lenders don’t focus on your credit report. Instead, they pay attention to your income. Thus, you can be approved if you have a regular salary or other sources of income (alimony, unemployed benefits, pension, etc.).
How Fast Can You Get an Emergency Loan?
The time of loan crediting depends on your lender. If you apply for a loan in a traditional bank, you can wait for a loan for some weeks. On the other hand, online lenders can transfer money even on the same day, so borrowers generally get cash within 24 hours.
Alternatives to Emergency Loans
If taking a loan is not an option, consider other ways to get cash urgently.
Family members or Friends
The cheapest and most convenient option to borrow money for emergencies is to take money from your friends or family. Such a way allows you to avoid extra fees and high-interest rates. However, this option is not always possible.
Home Equity Line of Credit
A Home Equity Line of Credit (HELOC) is a line of credit secured by your home equity. With HELOC, you can consolidate debt or pay for significant expenses. Before applying for the line of credit, take into account its interest rates which can change from month to month. Endure you will be able to repay debt. Otherwise, you may lose your home.