Best Emergency Loans for Bad Credit of November 2023

The Bottom Line

If you need an emergency loan and have bad credit, you still have fast loan options available. While not every lender offers loans to borrowers with poor credit, you can still choose from several great options that offer flexible loan amounts and repayment terms at competitive interest rates.

Upgrade is our favorite option for emergency loans for bad credit, thanks to its fast funding, competitive interest rates, rate discounts, and more. However, you may find an even better option based on your credit score, assets, desired monthly payment, and other factors. Make sure you compare.

Can You Qualify for an Emergency Loan If You Have Bad Credit? 

There are a few ways you can borrow money with "bad" credit. These include emergency personal loans, pawn loans, payday loans, credit card cash advances, cash advance app loans, car title loans, retirement account loans, and even home equity loans. Each of these methods is a little different, but they all have something in common: rates and fees for these loans will be expensive.

Having bad credit doesn’t mean you can’t qualify for an emergency loan. Rather, you’ll need to be able to show that you have income sufficient to repay the loan, usually measured by your debt-to-income ratio. Plus, your credit reports will need to show that whatever caused your bad credit score has been resolved (e.g., you’re not delinquent on any of your loans, and you’ve resolved any tax liens or other judgments).

Applying for an emergency loan with a co-applicant is an option if your credit issues haven’t been resolved or you don’t have enough income to repay the loan on your own. This is because you’ll be able to rely on your co-applicant’s good credit history rather than your own to get qualified. If you choose this option, make sure to repay the loan or you could damage your relationship with your co-applicant. Remember, delinquencies will affect their credit scores. 

Average APR by Credit Score

You won't find "Bad" credit as an official credit score rating, at least not in your FICO credit score. Instead, your bad credit may be "Fair" or "Poor" (or just "No Credit" if your credit history is thin). The table below shows average APR by credit score in July 2023 for loans funded by MoneyLion's lender partners.

How to Choose the Best Emergency Loan

When choosing a fast loan for bad credit, some of the most important factors to consider include how much the loan will cost, the terms you can get (which will determine your monthly payment), and how quickly you can apply and get funded.

• How much the emergency loan will cost: The cost of an emergency loan is made up of the interest rate you’re charged and the fees you’ll pay to get the loan. A loan’s annual percentage rate (APR) represents the sum of these two costs as an annual percentage of the amount borrowed. For this reason, the APR is the most useful cost to evaluate when comparing lenders and loans.
• What terms you can get on the loan: Before choosing a lender, ensure it offers a repayment timeline that fits your budget. Shorter repayment terms will result in larger payments since you’ll pay off the loan more quickly. This means you’ll also end up paying less interest over time. Look for a lender that offers the shortest repayment term you can comfortably afford.
• How quickly you can apply and get funded: It’s also important to evaluate how easy it is to apply for the loan and how quickly you’ll get funded. These two factors are often related since lenders that offer an easy online application process may also offer fast funding. Many of the best lenders offer approval in minutes and funding in as few as 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, gather your personally identifiable information (e.g., Social Security number, date of birth, address), income information, and details about the funding you need (loan amount and purpose). This will make the application process easier, as lenders will require you to provide this information. 

Often you'll submit a preliminary application with basic details to see if you qualify, which won’t 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 might be able to receive. Read the terms and conditions carefully.

If the proposed rates and terms are acceptable to you, you can proceed with the full application. At this point, the lender will perform a hard credit inquiry, which will affect your credit scores. You may also be asked to provide additional documentation, like copies of pay stubs or bank statements.

If you’re approved, review the final loan offer and decide if the terms are acceptable. The lender will send you the funds in the manner specified in your application—for instance, depositing the funds into your checking account or disbursing the funds directly to your other creditors.

Finally, you’ll set up your account via an online portal or mobile app so you can manage your loan.

Best Uses for an Emergency Loan

Some lenders may have restrictions on how you can use the loan, such for investing or gambling or to pay for college tuition and fees, but most situations that we would consider "emergencies" aren't among them. Because loans to borrowers with bad credit are expensive, you should carefully consider whether or not your situation is a true emergency. Situations that might qualify include:

• Expenses related to a medical emergency or procedure
• A home repair or replacement of an appliance
• Car repairs
• Replacement for lost income to cover monthly bills
• Funeral costs

Debt Consolidation the Most Common Reason for a Personal Loan

In Investopedia's 2023 Personal Loan Borrowers Survey, when we asked current and potential borrowers what they planned to use their loan for, more borrowers said debt consolidation than for any other reason.

Alternative Types of Emergency Loans for Bad Credit

An unsecured personal loan is not your only option for an urgent loan, but you should carefully evaluate all of the following alternatives before choosing one.

• Credit card cash advance: Most credit cards allow you to withdraw cash—a cash advance. These loans can be expensive, however, with APRs as high as the card's default rate (usually around 30%). You'll also be charged a withdrawal fee of a few percentage points of the amount advanced, and interest will begin accruing immediately.
• Payday loan: A payday loan is an advance on your next paycheck. These short-term loans come with high interest rates and fees, resulting in APRs of 400% and more. Because of their expense, they can make it hard to break the cycle of debt.
• Payday Alternative Loan (PAL): Many credit unions offer PALs, loans of up to six months for relatively modest amounts—$1,000 or less. While APRs can be steep, they are capped at 28% by federal regulation.
• Cash app: Apps and services like Dave, Earnin, and the like offer short-term cash advances of small amounts ($20 to $500), for a fee. Most of these services charge a subscription and may have other requirements, like opening a checking account, on top of the fees associated with the loan.
• Title loan: A title loan, or a car title loan, is a secured loan option, backed by an asset you own, usually a car. Loan amounts are tied to the market value of the car, and often capped at 50% of that value. Terms are short—30 to 180 days—and APRs are as high as 400%.
• Home equity loan: If you need a significant amount of money, and your emergency can wait, you can tap into the equity you have in your home, if any. The process of getting a home equity loan or home equity line of credit can take 30 to 60 days, or more, so this isn't the solution if you are in a hurry. Rates and fees will be considerably cheaper than other alternatives here, assuming you can qualify.
• 401(k) loan: If you have a 401(k) through your employer, you may be able to borrow from it. Loans are capped at half the account's value or $50,000, whichever is lower. Fund access is fast, 7-10 days. You'll have to repay the loan, with interest, in five years. The interest is paid into your account, and in effect it is like recouping some of earnings loss you experienced due to the withdrawal of funds.

How to Build an Emergency Fund

If emergencies are unavoidable, borrowing to pay for one doesn't have to be. All you need is a dedicated savings account—an emergency fund—to help see you through. But how do you build one?

1. Set a savings goal: How much should you save? You might aim for several months worth of living expenses (just the basics), or focus on the types of emergency spending you've experienced (car repairs or a vet bill, say) and set an amount that would cover that as your goal.
2. Set up consistent savings: Find a system that works for you that makes saving automatic and consistent. One way is to set up automatic fund transfers to a dedicated savings account. The transfers do not need to be large. Consistency is the key.
3. Set aside windfalls: If you get a bonus at work, a tax rebate, or some other financial good luck, resist the urge to spend all of it. Send some to your emergency savings account to boost your financial cushion.
4. Decide where to save it: Banks and credit unions are the obvious choices. Look for high yield savings accounts that will help your money grow faster.
5. Be careful about spending it: Not every emergency is dire, so be careful about spending your emergency fund. Regular car maintenance is not an emergency (ideally you'll budget for this); a repair to keep your car safely on the road and operable is worthy of a dip into your emergency fund.

Methodology

To evaluate and rank personal loan providers we collected hundreds of data points across 70 lenders, including traditional banks, credit unions, fintechs, and special interest finance companies. We researched and evaluated APRs, loan amounts and terms, fees, customer experience, and much more. To rank the lenders in our database and to generate star ratings, we weighted the data we collected, based in part on what consumers told us were the most important features of a personal loan and lender. We grouped those factors into four broad areas:

• Loan costs (advertised APR, fees, and six other factors): 29.25%
• Loan terms (loan amount, repayment term, and three other factors): 22.25%
• Borrowing requirements (credit score, membership requirement, and six other factors): 28.5%
• Additional features (online application, pre-qualification, and eight other factors): 20%