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5 Types of Bad Credit Emergency Loans

Life is full of unexpected moments. Sometimes, these surprises are wonderful and welcomed. Other times, when they come in the form of an emergency, they can be stressful and frightening. Often, an aspect that makes unexpected events even more unfortunate is their cost. Emergencies tend to be expensive. 

Few people have money reserved for emergencies. In fact, a recent report claims that only 39% of Americans could afford an unexpected expense of $1,000. This figure implies that when these unexpected costs arise, most Americans feel a significant strain on their finances. 

Whether it's a medical emergency, car repair, or home improvement project, finding the funds to address these urgent needs can be challenging, especially if you have bad credit. This is where emergency loans can provide a lifeline, offering quick access to the funds you need to weather the storm.

Key Takeaways

  • Many Americans struggle to cover unforeseen costs, with only 39% able to afford a $1,000 emergency. This financial strain underscores the importance of emergency loans in helping individuals navigate tough times.
  • Emergency loans are personal loans designed to offer quick access to funds during financial crises. They are approved swiftly, usually within 24 to 48 hours, and can be used for various urgent expenses, such as medical bills, car repairs, or home improvements.
  • Despite bad credit, individuals have several emergency loan options, including payday-alternative loans (PALs), credit card cash advances, payday loans, title loans, and installment loans. Each option caters to different needs and financial situations, providing flexibility and accessibility during emergencies.

What Is an Emergency Loan?

An emergency loan is a type of personal loan designed to provide fast access to funds when you're facing an unforeseen financial crisis. Unlike traditional loans that may require extensive documentation and a lengthy approval process, emergency loans are typically approved quickly, with funds disbursed in as little as 24 to 48 hours.

How Do Emergency Loans Work?

An emergency loan is usually a personal loan. That said, emergency loans come in a couple of different shapes and sizes, offering a straightforward process to help you during tough times. When you apply for an emergency loan, whether online or in person, you'll need to provide some key information. This includes details about your income, employment status, and overall financial situation. If you decide to use a title loan for an emergency, you'll also need to submit your vehicle for an inspection.

If your application is approved, you'll receive the loan amount in a lump sum. This means you'll get the entire loan amount at once, which you can then use to cover your emergency expenses. The funds can be used for various purposes, such as medical bills, car repairs, or home improvements.

The best part is, that once you receive the funds, you have the flexibility to use them as needed. Whether it's paying off urgent bills or addressing unforeseen expenses, an emergency loan provides the financial support you need to navigate challenging times.

5 Types of Emergency Loans for Bad Credit

As we mentioned above, emergency loans are more of a category than a specific loan type. So, we have gathered up all the emergency loans out there to give you a rundown. Here are five emergency loan options that you can apply for with bad credit and when you are in financial straits. 

Payday-Alternative Loan (PAL)

PALs are small-dollar loans offered by credit unions as a more affordable alternative to traditional payday loans. These loans typically have lower interest rates and longer repayment terms, making them a more manageable option for borrowers with bad credit.

Who It's Best For

PALs are a great option for individuals who need a small loan quickly and have limited credit history. Offered by credit unions, PALs serve as a safer and more affordable alternative to traditional payday loans.

Credit Card Cash Advance

If you have a credit card, you may be able to access cash quickly through a cash advance. However, cash advances often come with fees, so it's important to consider the costs before proceeding.

Who It's Best For

Ideal for those with a credit card and an available cash advance limit, this option provides quick access to cash. However, it's important to note that cash advances often come with high fees and interest rates.

Payday Loan

A payday loan is a short-term loan that is typically due on your next payday. These loans are designed to provide fast access to cash for people who need it urgently, but they often come with significant additional costs.

To apply for a payday loan, you'll need to provide proof of income, such as a pay stub, and a post-dated check for the amount you're borrowing plus fees. The lender will hold onto the check until your next payday, when they will cash it to repay the loan.

Who It's Best For

Payday loans cater to individuals in need of immediate cash with no other viable options. While they offer quick access to funds, they often carry exorbitant fees and interest rates, making them a costly choice.

Title Loan

A title loan is a type of loan where you can borrow money using your vehicle as collateral. This means that if you fail to repay the loan according to the terms agreed upon with the lender, they have the right to take possession of your vehicle. While title loans can provide quick access to cash, they also come with risks that borrowers should be aware of.

When you apply for a title loan, the lender will typically require you to surrender the title of your vehicle, along with a copy of your keys. This serves as security for the loan and gives the lender the right to repossess your vehicle if you default on the loan. It's important to understand the terms of the loan agreement, including the interest rate, repayment schedule, and consequences of defaulting.

Who It's Best For

A title loan is suitable for vehicle owners who can use their vehicle's title as collateral to secure the loan. Again, failing to repay the loan could result in the loss of the vehicle.

Installment Loan

An installment loan allows you to borrow a larger amount of money and repay it over time in regular installments. These loans often have more favorable terms than other loans, making them a more affordable option for borrowers with bad credit.

Who It's Best For

An installment loan is an excellent choice for those requiring a larger loan amount and the ability to repay it over time. With fixed monthly payments, it's easier to budget and manage.

How To Choose the Right Emergency Loan

When facing an emergency, choosing the right loan is crucial. Here are some tips to help you make an informed decision:

  • Assess your needs. Before applying for a loan, determine how much money you need to borrow. Consider your emergency expenses and only borrow what you can afford to repay.
  • Check for fees. In addition to interest rates, lenders may charge fees such as origination fees, late payment fees, or prepayment penalties. Be aware of these fees and factor them into your decision.
  • Understand repayment terms. Review the loan's repayment terms, including the length of the loan and the monthly payment amount. Make sure you understand how and when you need to repay the loan.
  • Read the fine print. Before signing any agreement, carefully read the loan terms and conditions. Pay attention to any hidden fees or clauses that may impact your ability to repay the loan.
  • Consider alternatives. Explore alternative options, such as borrowing from friends or family, using a credit card, or seeking assistance from local organizations. These options may offer more favorable terms than traditional emergency loans.
  • Seek financial advice. If you're unsure about which loan is right for you, consider seeking advice from a financial advisor. They can help you understand your options and make an informed decision.

By following these tips, you can choose an emergency loan that meets your needs and helps you address your financial emergency with confidence.

Reasons for an Emergency Loan

The following emergencies are some of the most common reasons Americans take out online emergency loans.

To Pay Off Unexpected Medical Bills

An emergency trip to the hospital for any reason is stressful. However, when you add the bill at the end, it can become overwhelming. Sometimes medical costs are anticipated, for instance, a scheduled surgery or procedure. But the price of these may increase depending on various factors when they are conducted. If any additional doctors are required or extra materials or time are needed, you may find the money you had set aside for the bill is no longer sufficient.

On the other hand, some medical emergencies are true to form emergencies. These could be accidents or sudden illnesses that require immediate medical attention. Unfortunately, we cannot anticipate these expenses. You may be between paychecks or have recently drained your savings paying for something else, regardless, you need help, and you need it quickly.

To Help with Dental Costs

A visit to the dentist is usually not an enjoyable experience in the first place. When you add the bill into the equation, it can become downright unpleasant. Dental work is notorious for its price. Few Americans are lucky enough to have insurance to help with dental costs, and even if you do, it may not cover the whole bill.

Unfortunately, the longer you wait to get the dental work you need, the worse your issue may become. A cavity left to its own devices can be painful and turn into a larger problem.

Paying for Home Repairs

Owning a home is wonderful. You have an asset and are on the property ladder plus, you truly have a place to call your own. However, people often underestimate the costs involved beyond mortgage payments and the initial price of the place. New and old homes can become money pits before you know it.

A man repairing his cabinets.

Perhaps, you bought a charming old home, and now it needs re-wiring because the ancient wiring job at present is a fire hazard. Alternatively, you bought a brand-new condo only to realize the walls are paper thin and you can’t get a good night’s sleep. Home repairs and renovations are costly. However, the more urgent ones (such as a re-wiring job) may need to be dealt with immediately.

Dealing with Emergency Vehicle Costs

Even a minor fender bender can mean expensive damage to your car. Though you may feel safe driving around with a loose bumper or broken taillight, it is illegal, and if caught, you could find yourself paying far more money in fines than in the initial repair costs. 

If your car requires repairs, you may need to deal with them right then and there, or else they could lead to worse damage and you not being able to drive your car. Rather than leaving your vehicle at the shop and trying to find alternative ways to get to work and pick up the kids, why not consider an installment loan for emergency expenses?

Fixing Broken Appliances

We often forget how reliant we are on our appliances. However, if your refrigerator breaks down while you’re at work and you come home to the smell of rotting food, you will quickly realize how necessary it is. When it comes to air conditioning and heating systems, this holds as well. Furthermore, repairs become vital if you live in a northern state and your heating stops working in mid-January.

The cost of emergency repairs for appliances, heating, and cooling systems can be extraordinary. However, they often need to be fixed quickly to save one’s home from further costs, such as frozen pipes in the case of a broken heater and spoiled food in the case of a refrigerator. 

Using an Online Installment Loan for Emergency Expenses

Emergency expenses are a part of life. However, how we manage them can help mitigate the stress and financial strain. Most Americans do not have enough money set aside to pay for unexpected expenses. Simple Fast Loans provides a quick and straightforward application that can be done entirely online because we understand that simplicity and speed are everything when emergencies arise. 

Online installment loan amounts range from $200 to $3,000, depending on your income and ability to repay the loan. The maximum amount varies from state to state. Emergencies happen to everyone, so don't be afraid to reach out to get help right away. 

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