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Best Emergency Loans for Bad Credit
If you had a nickel for every time life threw you something unexpected, you’d never have a need for an emergency loan ever again. When life throws you a curveball, you may find yourself in an unplanned situation with an unexpected need for fast cash. Knowing how to get emergency loans and what your options are no matter what your credit score is, can help you safely navigate the situation and come out the other side on top.
To help you find the best online loans for bad credit, we used our in-house SimpleScore methodology that compares rates, loan amounts, terms, fees and customer support to review the best bad credit emergency loans.
Why trust The Simple Dollar?
The SimpleScore is a proprietary scoring metric used to objectively compare products and services at The Simple Dollar. We try to be as helpful and accurate as possible. We look at rates, loan size, customer satisfaction, support, and fees to determine a brand’s SimpleScore. Each unique category we compare will be given a score from 1 to 5.
Our SimpleScore scoring system makes it easy for consumers to pick the best products, brands and services that fit their unique financial situations.
The 6 best bad credit emergency loans of 2020
- OneMain Financial: Best for Same-Day Funding
- RISE Credit: Best for Interest Rate Reductions
- Upgrade: Best for Credit Monitoring Tools
- Avant: Best Mobile App Management
- Peerform: Best Bad Credit Marketplace Lender
- Net Credit: Best for Credit Building
Bad credit emergency loans at a glance
|OneMain Financial||18.00%–35.99%||$1,500–$20,000||24–60 months||4.4/5.0|
|RISE Credit||50.00%–299.00%||$500–$5,000||4–26 months||3.0/5.0|
|Upgrade||5.94%–35.97%||$1,000–$50,000||36 or 60 months||4.6/5.0|
|Net Credit||34.00%–155.00%||$1,000–$10,000||6–60 months||3.2/5.0|
*Rates accurate as of July 2021
What is a bad credit emergency loan?
A bad credit emergency loan is an unsecured personal loan that helps a person meet an unexpected and pressing financial need. In exchange for access to a lump sum of money now, you agree to pay back that money plus interest and fees in fixed payments over time. Generally, these payments are monthly and are a fixed amount for the life of the loan.
[ More: Unsecured vs. Secured Personal Loans ]
Some of the more common uses of bad credit emergency loans are paying medical bills, debt consolidation, emergency home or car repairs, appliance replacement or any other situation where you need fast access to cash without any other options.
How bad credit emergency loans work
Bad credit emergency loans are similar to traditional personal loans, with a few differences and it is important to understand how to get an emergency loan. First, the cost of a bad emergency loan is generally going to be higher. Loan rates depend on your credit profile and the risk to the lender. With bad credit, the risk is higher, which means higher rates.
Second, the amount you can borrow may be capped by the lender or by the state where you live. Many states and lenders have laws or rules in place to prevent borrowers from taking out more than what is reasonable at high rates and creating a worse financial situation for themselves.
The repayment process of emergency loans is the same as with traditional personal loans. Payments are made monthly until the full balance of the loan has been repaid. Each payment consists of money going towards the principal (the actual amount borrowed) and a portion going towards interest and fees (the cost of borrowing).
The annual percentage rate (APR) is the total cost of borrowing your loan throughout the year. This figure takes into account interest and all fees to give the most accurate picture of what your loan will cost. The APR will also tell you at what rate the balance increases each month that the loan is not paid off — this is commonly referred to as interest.
Repayment terms is the length of time you are given to pay back the money that you borrowed. Generally, this is going to be from a few months out to a few years. Payments will be made monthly with even amounts spread out over the entire term of the loan. In most cases, the shorter the loan term you select, the lower the interest costs, but the higher the monthly payments.
[ More: Best Installment Loans ]
The principal balance is the total amount of money that you choose to borrow from your lender. Generally, emergency loans for people with less-than-great credit will have lower maximums of what you can borrow. A good tip is only to borrow the money that you need. Even if a lender approves you for a higher loan amount, only take what you need.
How to choose the best bad credit emergency loan for you
- Determine the amount you need and what you can afford. Before you start shopping lenders, take a few moments and determine the exact dollar amount you need. Additionally, figure out what monthly payments you can afford. The worst thing you can do is take out a loan that you have no plan how to pay back. Even though you are in a financial bind, you still have to be smart and think about the future.
- Shop the different emergency lending options available. With your needs determined, shop the different online loans for bad credit that are available. Take advantage of prequalification options where you can see roughly what you can get approval for. Most lenders will give you the rates and terms you should be able to get final approval for within a matter of minutes. If you’re worried, most all of these preapproval processes do not use a hard inquiry on your credit score.
- Select a lender and complete the final application. Once you find a fitting option, complete the final application. After that, you will get your official rate, terms and loan amount. If it works for you, sign the loan, and you should get your money quickly after that.
How fast can I get an emergency loan?
If you need cash fast, then waiting a few weeks or even a few days is out of the question. How fast you can get an emergency loan depends on the lender, your credit, your location, the loan amount and other factors. Some lenders will pre-qualify you for a loan, which can really speed up the process. Prequalifying usually doesn’t impact your credit either, as most of the time it only requires a soft credit pull. A few online lenders will even transfer funds to your bank account the same day, or next business day. So if you need money quickly when getting a bad credit emergency loan, it pays to shop around to find a lender that will work with you to get you your funds fast.
6 ways to prepare for emergency expenses
Emergencies happen. While you can’t predict when an emergency will strike, it does pay to be prepared so you’re not caught totally off-guard. Start-out with these top tips:
- Create an emergency fund. Put a percentage of your paycheck into a savings, interest-bearing checking, IRA, or other bank account.
- Set-up a 401(k). If your employer offers a 401(k), then take advantage of this great way to save. Some employers will match your contribution, adding up to increased savings overtime.
- Don’t spend more than you take in. Living within your means is one of the best ways to prepare for that rainy day. Living below your means and socking money away is even better.
- Create a budget and stick to it. Budgets let you know where you’re spending the most money, and give you a good overview of all your expenses.
- Try to pay off high interest debt. Interest adds to your monthly payments. High interest credit cards or loans can make it more difficult to pay off your debt, and may lead to late payments or no payments.
- Improve your credit. Check your credit reports and dispute any inaccuracies that may be harming your credit score. Also, if you do decide to take out an emergency loan for bad credit, making on-time payments over the life of the loan will improve your credit.
We welcome your feedback on this article and would love to hear about your experience with the bad credit personal loans we recommend. Contact us at firstname.lastname@example.org with comments or questions.