
Your Go-To Guide For Emergency Loans
Building an emergency savings fund doesn’t happen overnight but car repairs, a job loss or natural disaster can happen in the blink of an eye and create financial obstacles.
If you need fast cash for an emergency and what’s in your wallet won’t cover it, you may need an emergency loan.
Let’s take a look at your options for emergency loans, how to get one and what to look out for when considering one.
What Are Emergency Loans?
An emergency loan provides fast financial relief in times of unforeseen expenses. Emergency loans deposit money into your account quickly, and sometimes immediately, to help you in times of crisis.
Emergency loans can be used for various reasons including:
- Medical bills
- Funeral or burial expenses
- Urgent repairs to your home
- Unexpected car repairs
- Emergency veterinarian care
- Unexpected travel
- Debt consolidation
- Rent and mortgage payments
- Utilities
Though there are a variety of options for emergency loans, unsecured personal loans are the most affordable and common option. Unsecured loans don’t require borrowers to tie any assets for collateral on the loan. Instead, your credit score is the biggest factor in your loan’s terms, amount and interest rate.
Additional Types Of Emergency Loans
Emergency loans come in a variety of forms, including unsecured personal loans, credit card cash advances, payday loans, title loans and pawn shop loans. The loan terms are set by each specific lender but are known for having shorter repayment periods with higher interest rates.
In addition to personal loans, emergency loan options can include:
- Credit card cash advances: A credit card cash advance allows card owners to withdraw money based on their credit card account. Personal loans are often more affordable since as soon as you take cash out, interest accrues right away and credit cards often have higher APR (annual percentage rate) along with transaction and processing fees as well.
- Payday loans: Payday loans are often viewed as a riskier option due to high interest rates, high APR and a shorter-term repayment period. These loans require borrowers to pay off the loan balance by the time they receive their next paycheck. However, payday loans have a quick deposit turnaround since the total loan amounts are often smaller.
- Title loans: Title loans require borrowers to use a car title as collateral. These loans often have high fees and APR, and an average repayment period of 15 – 30 days. Title loans also have a quick turnaround deposit time.
- Pawn loans: Similar to a title loan, a pawnshop loan requires collateral – any item of high value you’re willing to leave at the shop. The pawnshop will assess the value and, depending on the resale value, will offer a loan. These loans have interest and if you are unable to repay the loan, the pawnshop will sell your item.
How Emergency Loans Work
The biggest benefit to emergency loans is the fast deposit. Within a few business days – or depending on the lender, even same-day – money can be deposited directly into the borrower's bank account.
Personal loans are a type of installment loan, which means the borrower receives the money in a lump sum. Depending on the loan terms, repayment periods can range from a few months to a few years but are often offered at a fixed-rate payment over the life of the loan.
Emergency loans collect interest on the money borrowed and typically include an origination fee. Since emergency personal loan amounts range from $1,000 – $100,000, it’s important to only take what you need.
If you decide to take on a risker emergency loan option, such as a credit card cash advance, payday, title loan or pawn shop loan, pay close attention to the fine print. These emergency loan options frequently have less-favorable terms, including shorter repayment terms, higher interest rates and/or higher APR compared to personal loans. For example, if you took out a title loan and defaulted on it, you could lose your car since it was used as collateral.
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What To Consider When Finding An Emergency Loan
Every lender has its own requirements, rates and terms. With that in mind, it’s important to weigh all your options.
When comparing different lenders for emergency loans, consider the following:
- Deposit turnaround time: Odds are you need cash fast. It can take some lenders a few weeks, but others may offer same-day deposits
- Interest rates and APR: The stronger your credit score, the better the interest rate for a personal loan. Even with not-so-great credit, you should shop around. Remember to consider other fees, customer service, availability and more when considering your lender.
- Repayment terms: Since emergency loans have shorter repayment periods, it’s important to calculate your monthly payment and ensure even in these tough times, you can afford to make your payments on time.
- Penalties and fees: Even the best-looking loan can have costly fees. Pay close attention to the origination fee and any prepayment penalties.
- Qualification requirements: Your credit has a big impact on your loan terms so consider each lender's eligibility requirements and application process.
Even in difficult times, you’ll want to carefully review each lender's offer and requirements to avoid putting yourself into an even worse financial situation. It’s recommended you speak with a financial professional to help you make the best decision based on your individual situation.
How To Get An Emergency Loan
Most banks, credit unions and online lenders offer emergency loans.
To apply for an emergency personal loan, typically you’ll need to follow these steps:
- Figure out your financial situation. This step includes determining your credit score and taking any steps to improve it if needed.
- Calculate what you need. Once you know your credit score, you’ll want to budget and calculate how much you actually need to borrow for your emergency. You’ll receive your money in a lump sum, but you’ll also be accruing interest so it’s important to have a thorough and accurate budget.
- Start your research and compare lenders. Now that you know how much you need, it’s time to start looking into offers and comparing different lenders.
- Submit your application. Once you’ve decided on a lender, start gathering your documents and begin the application process. Depending on the lender, this process could be completed on the same day or may take a few business days.
Emergency Loan FAQs
It can be overwhelming when deciding what the best financial move is for you. Let’s take a look at some frequently asked questions about emergency loans.
What can I use an emergency loan for?
Emergency loan options are available to provide financial relief in a variety of unexpected scenarios like medical or dental emergencies, property damages, sudden job loss, illnesses, funeral expenses and more. This is not an exhaustive list because emergencies happen unexpectedly and affect individuals differently.
How do I get an emergency loan with bad credit?
Even if you have fair or poor credit, there are still emergency loan options available. If you have bad credit, you could consider using a co-signer or applying for a secured loan.
Will an emergency loan impact my credit?
Online lenders typically require a hard inquiry on your credit, which may result in a drop on your overall credit score. For a personal loan, you may only see a drop in a few points but if you have multiple hard inquiries within a specific time frame, it may be a more drastic drop.
What alternatives are available for emergency loans?
If an emergency loan isn’t necessary for your situation, there are a variety of additional options including:
- Using a zero-interest credit card
- Requesting an employer paycheck advance
- Obtaining a home equity loan or home equity lines of credit (HELOC)
- Withdrawals from a savings account
- Borrowing from a family member or friend
- Nonprofit organizations or charities
Even if you don’t need an emergency loan, there are other options available for emergency funding fast.
How do I know if I need an emergency loan?
Personal loans make the most sense for those without enough money in their savings account, or those who don’t have collateral but still have a decent credit score.
Emergencies come in all shapes and sizes so it’s important to reflect on your current budget. Although an emergency personal loan is often less expensive than other types of credit, you want to ensure you can still comfortably afford the monthly payment during the life of the loan.
How can I build an emergency fund?
Starting your emergency fund takes time but can help prevent needing any further emergency assistance in the future. The best tips for building an emergency fund are to determine savings goals and set up automated savings.
Create a budget for how much money you would like to deposit into your emergency fund that doesn’t put you beyond your current means, but can help you cover smaller unexpected expenses as they come.
The Bottom Line
Everyone's financial situation is different. Whether you need an emergency loan for a broken-down car or a surprising medical bill, a personal loan can provide a great sense of relief during an already stressful time.
Ready to take control of your emergency expenses? Start your online application for a personal loan today with our sister company Rocket Loans℠.
Getting A Personal Loan Has Never Been Easier.

Hanna Kielar
Hanna Kielar is a Section Editor for Rocket Auto℠, RocketHQ℠, and Rocket Loans® with a focus on personal finance, automotive, and personal loans. She has a B.A. in Professional Writing from Michigan State University.