Can I Get an Emergency Loan With Bad Credit? Your Options

Having bad credit doesn't prevent you from getting an emergency loan, but your options may be more limited. Some online lenders work with borrowers who have lower credit scores, though you may face higher APRs and shorter repayment terms.

In general, the easier an emergency loan is to access, the more expensive it tends to be. This guide explains how to qualify for an emergency loan with bad credit and compares lower-risk options, including personal loans and credit union PALs. 

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What Counts as an Emergency Loan?

An emergency loan is money borrowed from a lender to cover an urgent expense. Here are some common uses for emergency loans:

• Dental or medical bills

• Car repair

• Urgent home repairs

• Unexpected travel costs

• Rent or mortgage shortfall

• Covering a gap between paychecks

Emergency Loan Options at a Glance

There are several ways you can get an emergency loan. Some are safer and easier on your finances than others. Take a look at your options:

Lower-Risk Options: Where To Start

Not every emergency borrowing option carries the same level of risk. If you’re still deciding where to get a loan with bad credit, comparing the main loan types side by side can make the tradeoffs easier to spot. 

Cash Advance Apps

These charge no interest or low fees, skip the credit check and are designed for small cash gaps between paychecks. 

Choose This Option If

• You want a small amount quickly. 

• You want to avoid a credit check. 

Credit Union PALs

If you belong to a credit union, this may be a better option. APRs are capped at 28% and loan amounts range from $200 to $2,000.

Credit unions offer two types of PALs: PAL I and PAL II. They each have different borrowing limits, repayment terms and eligibility requirements.

Choose This Option If

• You already belong to a credit union. 

• You need $200 to $2,000 at a relatively low interest rate.

Personal Loans

Personal loans may offer larger amounts and reasonable APRs for qualified borrowers. Compare offers carefully and avoid loans with APRs above 36%.

Choose This Option If

• You need a larger amount. 

• You can qualify for an APR lower than 36%. 

If you need a few hundred dollars — such as $400, $600 or $800 — compare small-dollar loan options before taking out a larger personal loan.

Higher-Risk Options and Why To Avoid Them 

Generally, if you can’t qualify for a personal loan, you may reach for riskier options like a payday or title loan. These loans should be approached with caution since they have high APRs and can keep you stuck in a debt cycle. 

• Payday loan: This short-term option offers small amounts — typically $100 to $500 — that you repay all at once on your next payday. According to the Consumer Financial Protection Bureau (CFPB), payday loan APRs commonly run around 400%. They are also banned or restricted in some states.  

• Title loan: You can secure your loan with your vehicle. APRs exceed 200% and repayment is due in 30 days. If you default on the loan, you could risk losing your collateral. Title loans are banned in many states. 

How Much Will You Actually Pay? Quick Cost Examples

Borrowing $500 can cost you more depending on which method you use. Here’s how payday loans, PALs and personal loans stack up against one another.

Keep in Mind

A payday loan may look cheaper, but most borrowers can’t pay off the loan in two weeks. A payday loan can easily land you in a continuous debt cycle.

How To Choose Your Option

The best option depends on how much you need, how fast you need the funds and what you qualify for. Here's a quick guide to help you decide.  

• Choose a cash advance app if → You need a small amount of money quickly and want to avoid a credit check. 

• Choose a credit union PAL if → You belong to a credit union and want a lower-cost alternative to a payday loan. 

• Choose a personal loan if → You need a larger loan amount and can budget for monthly fixed payments. 

• Consider a payday loan only if → You've exhausted all other borrowing options and are facing a true financial emergency. 

• Consider a title loan only if → You own your vehicle outright or have significant equity and have exhausted all other lower-cost borrowing options. 

Good To Know

Before you apply, it may help to understand whether you can get an emergency loan with bad credit based on your income, debts and how much you need.  

Non-Loan Alternatives To Consider First

Borrowing isn't always your only option. Consider these alternatives before taking on new debt. 

Use Your Emergency Fund

• There is no credit check or extra debt to take on.

• Continue to replenish your emergency fund once you take out the cash.  

Use Your HSA or FSA 

•  For medical and dental bills, use your health savings account (HSA) or flexible spending account (FSA). 

•  This requires no additional borrowing, interest or application.  

Request an Employer Paycheck Advance

• Many employers offer advances on earned wages.  

• If this option is available, it is much cheaper than a payday loan.  

Negotiate Directly With Your Creditor

• If the bill is medical, utilities or dental, you can speak directly to the creditor and work out a payment plan.  

• These payment plans typically don’t charge interest.  

Ask Family or Friends

• This option has no credit check and you may get immediate access to funds. 

• Make sure you get any agreement in writing.  

How To Spot Loan Scams and Predatory Lenders

Don’t apply if you see the following red flags:  

• Guaranteed approval claims, as they may signal a loan scam or expensive terms and conditions  

• Upfront fees ahead of funding, which are a hallmark of fake lenders  

• No state license, given that most states require lenders to hold a license with their financial regulatory agency  

• Vague APRs and fees, as federal law requires clear disclosure of costs and certain consumer protections 

Speed Comparison: Which Emergency Loans Fund Fastest?

Emergency loans have different funding timelines depending on the lender and loan type. Here's how quickly you may be able to access funds with each option.

Same-Day Options

• Cash advance apps: You can get your funds within minutes but the amount is usually small.  

• Credit card cash advances: If you haven't exceeded your credit limit, you can withdraw cash from the ATM. Just keep in mind that interest begins the moment you make the withdrawal.  

• Payday and title loans: You can get the funds on the same day, but APRs will be high and these loans should be treated as a last option.  

1 to 3 Days  

• Online personal loans: Many online lenders can send your funds within one to three days. The application doesn’t take too long to complete.  

• PAL: If you’re a member of a credit union, you can get funds within three business days and also benefit from capped APRs.  

3 to 7 Days  

• Traditional bank and credit union loans: These loans often take longer to fund, but interest rates are typically lower and you can get larger amounts.  

• 401(k) loan: You can borrow from your retirement account. These loans don’t require a credit check.  

How To Get an Emergency Loan With Bad Credit

Before applying for an emergency loan with bad credit, take these steps to compare lenders, understand borrowing costs and improve your chances of approval.

1. Consider how much you need: Knowing what amount you need can help when deciding how to handle where to get your funds. 

2. Pull your credit report: Check your report and be sure to correct any errors. 

3. Identify lenders: Look to the lenders that you can work with given your credit score.  

4. Prequalify with at least three lenders: You can prequalify at various lenders to compare APRs and terms. This is considered a soft pull and will not impact your credit. However, once you apply, it’s a hard pull and your credit score will be impacted.  

5. Look at your total cost: Review your repayment costs for each lender.  

6. Watch for fees: Check for origination fees, late fees, application fees and any prepayment penalties.  

7. Gather your documentation: Have your documentation handy when you apply.  

8. Apply for the loan: Choose your lender and apply for the loan.  

9. Accept the offer after approval: Review the terms and then accept the offer.  

What Happens to Your Credit Score

An emergency loan can have short- and long-term consequences. Here's what you should know:

• Your credit score may dip: When you apply for an emergency loan the lender will perform a hard inquiry on your credit and your score may dip temporarily.

• The average age of your accounts shrinks: Since you’ve added a new loan to the mix, it lowers the average age of your accounts. This could shave off a few points from your credit score.  

• Payment history can help boost your score: If you make consistent and timely payments, your credit score can improve.  

• Your credit mix may improve: Adding an installment loan can diversify your credit mix and boost your credit score.  

Next Steps

• Set up autopay: Confirm that automatic payments are set up for your emergency loan. This approach will help you avoid overdue payments.  

• Understand what caused the emergency: Was it a predictable expense that you just didn’t plan for? If the root issue is ongoing debt, this may be the point to look at whether you can consolidate debt and lower the pressure on your monthly budget.

• Start building an emergency fund: Even if you save a small amount, this fund can prevent you from having to get a loan in the future.  

• Monitor your credit report: You can pull your credit report for free at AnnualCreditReport.com. Take the time to review it and ensure that the payments to your emergency loan are being accurately reflected.

Key Terms

• Emergency loan: Money borrowed to cover an urgent, unplanned expense such as a car repair, medical bill or rent shortfall.

• PAL: A small-dollar loan from a federal credit union, capped at 28% APR with amounts from $200 to $2,000 and a maximum $20 application fee.

• Payday loan: A short-term, small-dollar loan due on your next payday, with APRs that commonly reach about 400% and rules that vary by state.

• Title loan: A loan secured by your vehicle, usually with APRs of 200% or more, meaning the lender can repossess your car if you default.

• Cash advance app: A tool that advances a small amount of earned or expected income, often with no interest and no traditional credit check.

• APR: The yearly cost of a loan including interest plus fees, which makes it the best figure for comparing borrowing costs.

• Hard inquiry: A lender's credit check when you formally apply, which can temporarily lower your credit score.

Sources

• CFPB: What is a payday loan?

• MyCreditUnion.gov: Payday Alternative Loans

Jacinta Majauskas contributed to the reporting for this article.

Parts of this article were created with AI assistance. MoneyLion editors reviewed, fact-checked and edited the final version and are responsible for its accuracy.