5 Easy Steps to Obtaining an Emergency Loan

It’s simple to apply for an emergency loan online, enter information about your bank account, job, and paycheck, and submit the form.

You can get quick cash with emergency personal loans to cover unforeseen expenses. These are a particular kind of personal loan that applicants can use in an emergency, for things like critical home repairs or medical expenses. Small in size, they are usually funded in a matter of days.

You’re not alone if you have an urgent need for money but lack the funds to pay for it. More than half of American adults (56 percent) said they wouldn’t withdraw money from their savings account to cover an emergency expense of $1,000 or more, according to the 2024 Bankrate Emergency Savings report.

In a pinch, knowing how to apply for various emergency loan kinds and comparing emergency loan rates might help you choose the best option.

How to apply for an emergency loan

Making an educated loan decision can be challenging when under stress. After an automobile accident, you might be interacting with insurance companies or physicians in a hospital emergency.

There are five steps you can take to make sure you select the best emergency loan for your situation, regardless of the circumstances.

1. Decide whether you require a quick emergency loan

Think about when you will require cash. Fast emergency cash is needed in certain situations, such as paying for a significant auto repair, the upfront deductible for urgent care admission, or a roof repair company.

However, you might be able to schedule your dental work in advance or your insurance may pay for a rental car while your car is being fixed. It allows you time to compare prices if you have a few days or more before you need money. Better terms and rates might be available.

2. Examine various loan options and providers

Make sure to compare the terms and rates provided by at least three different companies. Your financial status and the urgency of your need for funds will determine which emergency lender is best for you.

Emergency loan types

Emergency loans come in a variety of forms. Every option possesses advantages and disadvantages, and certain options might be more suitable for your financial situation and circumstances.

Payday loans, credit card cash advances, title loans, and personal loans are the fastest ways to get cash if you need it in a day or two to cover unexpected expenses. Personal loans are the least expensive and least problematic of those options.

You may also think about a home equity loan, or HELOC if your cash needs are not as urgent.

3. Obtain prequalified

When you start looking around, the majority of emergency lenders prequalify you based on the information you give them. Obtaining the ideal loan for you will rely on several variables.

Credit score

Lenders use your credit score as a risk indicator for credit cards, home equity loans, and personal loans. You might need to look around for loans provided by fair and bad credit lenders if your credit score is less than 669. You might have to settle for a payday loan or title loan if you don’t have any credit history.

A hard credit check may result in a brief decline in your credit score if you choose to apply for a personal loan, home equity loan, or home equity line of credit. Making all of your payments on time and in full each time can help raise your credit score.

However, that is only accurate if the lender submits information to all three of the major credit bureaus. Usually, payday and title lenders don’t.

Terms of repayment

To prevent a one-time emergency from becoming a long-term debt payment, pick the shortest repayment term that you can comfortably afford. In the long term, you’ll pay less interest the quicker you pay off the balance.

Usually, payday loans must be repaid in 14 days. The duration of a home equity loan can reach 30 years. One to seven years are the possible durations for personal loans.

Interest rates

Generally speaking, rates for home equity and HELOC loans are lower than those for other emergency loans. Rates on personal loans can range from 8% for those with excellent credit to 36% for those with poor credit.

Because title and payday loans typically don’t consider your creditworthiness, their rates are very high. Examine APR carefully when looking for an emergency loan. It covers both fees and interest. The APR can be used to determine your payment amount and the total cost of borrowing money.

4. Fill out the application

After deciding on the finest emergency loan provider, you have to fill out an application and submit any supporting documentation that the lender requires. For a personal loan, you might need to provide paperwork such as your driver’s license, proof of address, and pay stubs.

The same assets, tax returns, and maybe even a home appraisal that you required when you purchased your house may be needed for a new HELOC or home equity loan. To receive your money as soon as possible, submit your documentation as soon as you can.

5. Await the financing and decision

Depending on the kind of loan you take out, there will be a delay in receiving your funding and decision. Typically, funding is deposited straight into your bank account, with future payments scheduled for automatic withdrawals.

Loan type and Time to funding

• Personal loan, payday loan, title loan: 1-7 business days
• Credit card cash advance: Instant
• Home equity loan, HELOC: Up to 45 days

Where can I get an emergency loan?

Emergency loans are provided by several financial organizations. Depending on how, when, and where your emergency arises, there may be more than one that’s appropriate for you.

Online lenders

You can apply for an emergency personal loan online from the comfort of your home by simply filling out a few personal details. You can compare multiple loan options at once when you apply for a loan online, and these options might be available after most banks have closed.

Online lenders provide quick money. An online lender is your best option if your finances are unstable and you need money right away.

Payday lenders

In most places, payday lenders can be found online or in local strip malls. Usually, the only information needed for the applications is proof of employment and frequency of pay.

These loans have exorbitant, hard-to-understand fees and triple-digit annual percentage rates. They should only be taken into account if you are unable to get a personal loan for bad credit.

Car title lenders

Car title loans also don’t require a credit check, just like payday loans do. If you have some basic information about your car, you can get the funds quickly. However, the interest rates and other costs associated with these loans are usually very high.

Banks

If you’ve had a long-standing relationship with your local bank, they might be able to offer you an emergency loan with better terms and more competitive rates.

Knowing who you’re borrowing from in person is the primary advantage of using a bank. They might provide financial guidance to help you avoid borrowing money in the future for emergencies.

Credit unions

Similar to banks, credit unions normally provide you with reasonable loan terms and interest rates. They might also provide fast turnaround times for home equity loans and HELOCs.

For people with less-than-perfect credit, credit unions might be a better choice than banks. Their income and credit requirements are typically more relaxed.

Conclusion

When finances are tight, obtaining an emergency loan can help. A personal loan for an emergency can be obtained in five easy steps. To be sure you’re getting the best terms and rates, carefully weigh your options and compare lenders. Set up a repayment plan and only take out necessary loans.

You can prevent getting into a debt cycle and be ready for any unforeseen expenses by following these steps. To avoid having to borrow money when misfortune strikes, try to accumulate an emergency fund if you are not currently facing one.