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Contrary to popular belief, it is possible to get a personal loan even if you have bad credit. That’s why it’s important to consider all loan options before turning to high-cost predatory loans like payday loans when you’re faced with an emergency. You may be able to find a more affordable option, even if you have bad credit.
We chose Upgrade as our top lender for the best bad credit emergency loan because they offer a competitive rate of 6.95% to 35.97%, loans up to $50,000, and repayment terms of up to at 84 months. Additionally, you may qualify with a credit score as low as 550 and have the option to apply with a co-borrower. Plus, Upgrade can get you the emergency loan funds you need as quickly as one business day after your loan is approved.
Guide to Choosing the Best Bad Credit Emergency Loans
Do you qualify for an emergency loan if you have bad credit?
Having bad credit doesn’t mean you can’t qualify for an emergency loan. Instead, you’ll need to be able to show that you have enough income to repay the loan, usually measured by your debt-to-equity ratio. Additionally, your credit reports will need to show that the cause of your poor credit rating has been resolved (for example, you are not in default on any of your loans and you have resolved any tax liens or other judgments).
If your credit issues haven’t been resolved or you don’t have enough income to repay the loan on your own, you might consider applying for an emergency loan with a co-applicant. Indeed, you will be able to rely on your co-applicant’s good credit history rather than your own to qualify. If you choose this option, be sure to repay the loan or you could damage your relationship with your co-applicant. Remember that bad debts will affect their credit ratings.
Comparison of emergency loan lenders for bad credit
When considering an emergency loan, some of the most important factors to consider include the cost of the loan, the terms you can get, and how quickly you can apply for and get financing. Some of the most important factors to consider when comparing emergency lenders for bad credit are:
- How much will the emergency loan cost. The cost of an emergency loan is made up of the interest rate you are charged and the fees you will pay to obtain the loan. A loan’s APR, or annual percentage rate, is the sum of these two costs. For this reason, the APR is the most useful cost to assess when comparing lenders.
- What terms you can get on the loan. Before choosing a lender, make sure they offer the repayment terms you need. Shorter repayment terms will result in higher payments since you will pay off the loan faster. This means you’ll also end up paying less interest charges over time. Look for a lender that offers the shortest repayment term you can comfortably afford.
- How quickly you can apply and get funding. It is also important to assess how easy it is to apply for the loan and how quickly you will be funded. These two factors are often linked since lenders who offer an easy online application process can also offer fast financing. Many of the best lenders offer approval in minutes and funding in one to three business days (sometimes even the same day).
How to apply for an emergency loan if you have bad credit
Before applying for an emergency loan, first gather your personally identifiable information (e.g., social security number, date of birth, address), income information, and details about the financing you need (eg. example, the amount and purpose of the loan). This will make the application process easier, as lenders will ask you to provide this information.
You will usually submit a preliminary application with basic details to see if you can qualify, which will not affect your credit if the lender uses a soft credit check. The lender will tell you if you qualify and the rates and terms you may be able to receive. If the rates and terms are right for you, you will proceed with the full application. A credit check will be carried out, which will affect your credit scores, and you may need to provide additional documentation, such as pay stubs or bank statements.
If you are approved for a loan, you will need to review and agree to the final loan terms. Then the lender will send you the funds in the manner indicated in your application. For example, deposit the funds into your checking account or disburse the funds directly to your creditors. Finally, you will need to set up your account through an online portal or mobile app so that you can manage your loan.
Frequently Asked Questions
What is an emergency loan?
An emergency loan is a term used to describe several different methods of accessing cash for sudden, unexpected expenses. One of the most common types of emergency loans, and often one of the most affordable options, is the personal loan. However, an emergency loan can come in the form of a cash advance, a high-cost payday loan (avoid these if possible), a loan from a friend or family member. family or an alternative payday loan (PAL) at a lower cost from a caisse.
Where can you get an emergency loan if you have bad credit?
Several types of lenders offer bad credit emergency loans, including:
- Online lenders
- credit unions
- Traditional banks
- Credit card companies (cash advance)
- Relatives and friends
- Payday lenders
Remember, just because a borrowing option is available doesn’t mean it’s a good choice. Credit card cash advances, for example, are notoriously expensive and can hurt your credit score by increasing your credit utilization rate.
It’s also a good idea to avoid payday loans and title loans whenever possible. The Consumer Financial Protection Bureau (CFPB) warns that the average 2-week payday loan has a high APR that equates to almost 400%.
Will an emergency loan impact my credit rating?
Some types of emergency loans can affect your credit score, while others won’t. If a lender does not report your account to the credit bureaus, the loan will not affect your credit score, unless you are in default and a collection agency adds the bad debt to your credit reports at a later date. However, if a lender shares your account details with the credit bureaus, that’s a different story.
Banks, credit unions, and online lenders typically report account details to credit bureaus. Payday lenders and title lenders generally do not.
When a lender reports an emergency loan to the credit bureaus, how you manage the account determines whether it will help or hurt your credit score. If you make your payments on time, the account can benefit your credit score in the long run. However, if you make late payments or become delinquent on your debt, this emergency loan could hurt your credit score instead.
How fast can I get an emergency loan?
Many lenders offer quick financing to qualified borrowers. Some personal lenders can even deposit the funds into your bank account the same day your financing is approved.
On the other hand, loan financing can sometimes take several days or even up to a few weeks. Some lenders may take longer than others to process your loan application or release your funds. It’s also possible that your personal bank or credit union is holding funds that a lender deposits in your account for a few days before you can access the money.
Are there alternatives to emergency loans?
Some alternatives to emergency loans include negotiating payment plans in case you run into difficulties with your creditors or asking your employer for a payday advance. If these options don’t work for you, you could possibly get a cash advance from your credit card issuer (be careful as they are expensive) or an alternative payday loan (PAL) of $200 to $1,000. $ from a credit union. PALs can be a good option as they must be repaid within one to six months and APRs cannot exceed 28%.
Although you may be tempted to obtain a payday loan when faced with an emergency, exercise extreme caution before resorting to this financing option. Not only is this type of loan very expensive, but you could find yourself stuck in a payday borrowing cycle that is hard to escape.
How We Choose The Best Bad Credit Emergency Loans
Our team evaluated 38 lenders and collected 1,520 data points before narrowing down our top picks. We weighted more than 20 criteria and gave a higher weight to those having a more significant impact on potential borrowers.
Top picks were selected based on factors such as membership requirements (15% weighted), average fixed APR (15% weighted), and average origination fee (10% weighted).
We also considered flexible repayment terms, useful features such as pre-qualification, and whether co-signer or joint applications are allowed to ensure borrowers have the best possible experience. For more information on our selection criteria and process, our full methodology is available.