Emergency cash can provide much-needed relief when you’re in a tough financial situation. Whether you find yourself facing medical bills, car repairs, or just need a little extra to get by till your next paycheck, emergency cash can come in handy.
If you have a poor credit score, qualifying for an emergency loan can be challenging, but it’s not impossible. Options will be limited. You may have to look beyond traditional lenders. Be sure to read the fine print to avoid too much debt.
That sounds like a lot, but don’t worry. We’ll go over different ways to get cash fast so you can choose the best option for your situation.
What are emergency loans?
Emergency loans are typically short-term loans designed to provide quick access to cash. Most lenders offer almost instant approval and fast funding, allowing you to receive your money within a day or two.
You can find emergency loans from banks, credit unions, online lenders, or payday loan providers. Examples of emergency loans include personal loans, payday alternative loans, and cash advances.
Not all emergency loans come with the best terms. Many have high interest rates and extra fees and so it is important to evaluate repayment terms carefully. For instance, payday loans, car title loans, and pawnshop loans are best avoided due to their excessive fees and very short repayment periods.
What can I use emergency loans for?
Emergency loans can be used for anything you need. Common uses include covering unexpected medical bills, home or car repairs, paying overdue utility bills, or handling unforeseen travel expenses.
They can also help manage temporary cash flow shortages, such as when waiting for a paycheck. While emergency loans are versatile, it’s important to use them only for necessary expenses and not rely on them. Relying on borrowing money can lead to a cycle of debt.
Where can I find an emergency loan with bad credit?
Get a payday alternative loan
A Payday Alternative Loan (PAL) is offered by federal credit unions and serves as a safer option than traditional payday loans. With lower interest rates (capped at 28%) and more favorable terms, PALs can be a good solution for those with bad credit.
They are small-dollar loans, typically between $100 and $2,000, and offer more flexible repayment options, making them easier to manage. Check with your local credit union to see if they provide this option. Most require you to be a member for at least a month before you can take out a loan.
Apply for a payday loan
Payday loans are short-term loans designed for quick access to cash, even if you have poor credit. These loans don’t typically require a credit check, but they come with high fees and interest rates that typically equal a 400% APR (annual percentage rate).
Repayment is usually due within two weeks or on your next payday. While payday loans offer fast cash, they can easily trap borrowers in a cycle of debt, so it’s important to proceed with caution.
Consider a car title loan
Car title loans use your vehicle’s title as collateral, allowing you to borrow money based on the value of your car, regardless of your credit score. You typically receive 25%-50% of the value of your vehicle.
These loans provide fast cash and you get to continue driving your car. The catch is that the interest rates can be steep, you usually only have 30 days to repay the entire loan plus fees, and you risk losing your vehicle if you can’t repay the loan. Car title loans are a high-risk option, so consider them only if you have a clear repayment plan.
Take out a credit card cash advance
If you have a credit card, you will likely be able to withdraw cash, even with bad credit. Go to the ATM or your bank and use your credit card just like a debit card to take out cash. Most credit card companies allow you to borrow up to a certain limit. In return, they charge you a fee, plus the ATM fee, and a higher APR than on regular purchases. Additionally, the interest starts accumulating immediately – there’s no grace period. Use this option only if you can repay the money quickly to avoid high costs.
Visit a pawnshop
Pawnshop loans are short-term loans that use personal items, such as jewelry, electronics, or tools, as collateral. To obtain a loan, you bring an item of value to a pawnshop, and the pawnbroker will assess its worth and offer cash based on a percentage of the item’s value. If you repay the loan and interest within the agreed period, you get your item back. If not, the pawnshop keeps and sells the item to recoup the loan amount.
How to pick the best bad credit emergency loan
When choosing a bad-credit emergency loan, it’s essential to compare options carefully. Here’s what to consider to make sure you get the best loan for you.
Eligibility requirements: Check the lender’s criteria to ensure you qualify. Some lenders may accept scores below 670, while others might require a minimum credit score or specific income level.
Loan amount: Review the loan amounts offered. Make sure the lender provides enough funds without borrowing more than you need. Larger amounts can lead to higher interest costs.
Fees and interest rates: Look closely at the loan’s interest rates and any additional fees. Bad-credit loans often come with higher costs. Many lenders tack on an origination fee or prepayment penalty. Always shop around for the most affordable option.
Repayment terms: Examine the repayment terms to ensure they fit your budget. Some loans offer short repayment periods of only two weeks, while others provide more flexibility and can go up to two years or more. Choose a term that allows for manageable payments.
Funding time: Check the lender’s processing time to ensure you will get the cash you need when you need it. Many online lenders offer same-day or next-day funding, which can be crucial in emergencies.
The loan’s total cost: Calculate the total cost of the loan, including interest and fees, to understand how much you’ll end up paying. This will help you assess whether the loan is affordable and worth taking.
Alternatives to bad credit loans
Visit a charity or local nonprofit
Many charities and nonprofits offer financial assistance programs to help cover emergency expenses. These organizations may provide grants, food, or bill payment support, often without the need for repayment. Programs vary by location, so research what’s available in your area.
This option can be a great alternative to high-interest loans, especially if you’re facing immediate financial hardship. If you need help finding programs, call 211 for assistance.
Set up a payment plan
If you’re facing bills you can’t immediately pay, contact the company to set up a payment plan. Many credit card issuers offer flexible repayment options or hardship programs that allow you to break up larger bills into more manageable payments. If the issue is medical bills, call your provider’s billing office.
You may be able to negotiate a lower bill, set up a payment plan, or get it dropped altogether. Being proactive can help you avoid taking out loans while meeting your financial obligations.
Ask a loved one for help
Turning to friends or family for financial support can be a helpful alternative when you need quick cash. They may be able to offer interest-free loans or financial gifts to help you through tough times. It’s important to be honest about your situation and discuss repayment terms upfront to avoid potential strain on your relationship.
Request a payroll advance
Some employers offer payroll advances, allowing you to access a portion of your upcoming paycheck early. This option can help you avoid high-interest loans while still covering immediate expenses. Payroll advances are usually deducted from your next paycheck, so be sure to budget accordingly to avoid future cash flow issues.
Take out a cash advance
Cash advance apps let you borrow money with no credit check, no interest, and little to no fees. You connect the app to your bank account, and it will determine how much to lend you. The amounts vary between $20-$750 or more. You typically receive the money instantly (with a fast funding fee) or within one to three business days if you don’t pay an extra fee.
The advance is automatically deducted from your next direct deposit. The fees are generally lower than other short-term loans. The app may ask for a subscription, tip, or flat-rate fee. Be careful how much you tip, as you may end up paying a very high APR if you give too much for a small loan.
Borrow from your 401(k)
If you have a 401(k), borrowing from it can provide quick access to cash without going through a lender. While you’ll need to repay the money with interest, the rates are usually lower than those for bad credit loans, and the interest is paid back into your retirement account. Be cautious, though, as borrowing from your 401(k) could impact your retirement saving and there are tax implications.
Tips to steer clear of bad credit loan scams
When you’re in a financial bind, it’s easy to fall prey to bad credit loan scams. To protect yourself, keep these tips in mind:
- Research the lender: Before committing to any loan, research the lender thoroughly. Read reviews and complaints on sites like Trustpilot and the Better Business Bureau. Check with your state’s financial regulator agency to make sure the lender is licensed to lend in your area. Legitimate lenders will have a clear online presence, a registered business, and a physical address.
- Beware of upfront fees: Scammers often ask for payment upfront, claiming it’s for “processing” or “insurance.” Legitimate lenders deduct fees from the loan amount and never require payments before approval.
- Look for transparency: A trustworthy lender will clearly explain loan terms, including fees, interest rates, and repayment schedules. If a lender is vague or refuses to provide written terms, it’s a red flag.
- Check for pressure tactics: Scammers often pressure you to act quickly. Reputable lenders give you time to review the loan terms and make an informed decision.
- Avoid unsolicited offers: Be cautious of unsolicited loan offers received through email, text, or social media. Scammers often use these methods to target vulnerable individuals. Legitimate lenders will not contact you first.
By following these tips, you can protect yourself from falling victim to bad credit loan scams.
Steps to Build an Emergency Fund
The best way to avoid borrowing is to build an emergency fund. Having your own safety net ensures you don’t end up paying interest and fees the next time unexpected expenses hit. Here are the steps to help you get started:
1. Set a goal: Begin by determining how much you need to save. A general rule is to aim for three to six months’ worth of living expenses. This can be tough if you’re also paying off debt. Instead, start small with an initial goal of $500 or $1,000, then build from there.
2. Open a separate account: Keep your emergency savings separate from your regular checking account to avoid the temptation of spending it. A high-yield savings account is a good option to grow your funds faster. Look for high-yield savings accounts offered by online-only banks, as many have little to no fees.
3. Automate your savings: Set up automatic transfers from your paycheck or checking account into your emergency fund. Even small, consistent deposits add up over time and make it easier to save without thinking about it. Plus you won’t be tempted to spend it. Many employers let you split your direct deposit between multiple accounts.
4. Cut unnecessary expenses: Review your budget to identify areas where you can cut back. Perhaps you can reduce streaming services, cut cable, eat out less, etc. Redirect the money you save toward your emergency fund to build it faster.
5. Use windfalls wisely: Whenever you receive extra money, such as tax refunds, bonuses, or gifts, consider putting a portion into your emergency fund.
By following these steps, you’ll create a financial cushion that can help you handle emergencies without borrowing.
Frequently asked questions
1. Can I get an emergency loan with bad credit?
It is possible to get an emergency loan even with bad credit. Many lenders offer loans specifically for people with poor credit, including payday loans, car title loans, and personal loans from online lenders. These loans often come with higher interest rates and fees due to the increased risk for the lender. Before you borrow, compare your options carefully and consider the costs.
2. What types of emergency loans are available for bad credit?
Emergency loans for bad credit include payday loans, personal loans, car title loans, and payday alternative loans (PALs) from federal credit unions. Each loan type has different terms, interest rates, and requirements. Look over the details to determine which option is best for you.
3. How much can I borrow with a bad credit emergency loan?
The amount you can borrow depends on the type of loan and the lender. Payday loans are generally for $500 or less while payday alternative loans range from $100 to $2,000. Personal loans and car title loans can offer higher amounts, sometimes up to $10,000. The lender will assess your income, ability to repay, and current debt levels when determining how much to offer.
4. What’s the fastest way to borrow money?
The fastest method is to take out a credit card cash advance or borrow from a cash advance app as these are instant. Many online lenders and payday loan providers offer same-day or next-day approval and funding. Some federal credit unions provide payday alternative loans (PALs) with quick processing. To expedite the process, ensure you have all necessary documentation, such as proof of income and identification, ready when applying.
5. What credit score do I need for an emergency loan?
The minimum credit score required varies by lender and loan type. Many banks prefer scores of 600 or higher, but some online lenders offer loans to individuals with lower credit scores or no credit history at all. Payday and car title lenders, pawnshops, and cash advance apps do not consider your credit score. Lenders who offer loans for bad credit or do not require a credit score often have higher interest rates and stricter terms.
Bottom line
It is entirely possible to get cash when you need it. More and more lending options are popping up to help people find extra cash to cover expenses. Look over the options we listed and choose the one that best fits your budget. Remember, do not borrow more than you need to and be sure you can repay the money before you sign a loan agreement. There are plenty of other ways to get financial assistance if the cost of borrowing is too high.
