An emergency loan is a personal loan to cover unexpected expenses like medical bills or home repairs. These can be secured loans or unsecured personal loans, the latter doesn’t require collateral. Emergency loan funds can also be accessed through credit card cash advances but these come with high interest rates. To get an emergency loan, borrowers need to approach personal loan lenders or emergency loan lenders. Loan approval depends on credit score and credit history. Many lenders including credit unions offer secured personal loans and unsecured personal loan.

Features

• Flexible Terms. Emergency loans have flexible terms, borrowers can choose repayment periods and monthly payments that fit their budget.

• Fast Funding. One of the key feature is the speed of loan approval and disbursement, many online lenders offer fast funding to cover emergency expenses.

• Bad Credit OK. Some emergency loan lenders and credit unions offer options for bad credit, sometimes with minimum credit score but still borrow money.

• Varying Loan Amounts. Emergency loans have varying loan amounts to meet different needs, from small unexpected expenses to big financial emergencies.

Pros and Cons

Pros

1. Fast. Emergency loans work fast, get funded in a day or two from reputable online lenders.

2. Flexible Terms. Many emergency loan lenders offer flexible emergency loan terms, affordable monthly payments and custom repayment periods.

3. Accessibility. Even with bad credit you can get emergency loans through certain credit unions and lenders that accept lower credit score or unsecured loan options.

Cons

1. Origination Fees. Emergency loans have origination fees which adds to the overall cost of borrowing and reduces the amount you get.

2. High Interest Rates. Borrowers with lower credit score may have high interest rates especially when using credit card cash advances or unsecured loans, increasing the loan payment.

3. Debt Accumulation. Using emergency loans for debt consolidation loans or as emergency loan alternative can lead to higher debt if not managed properly, especially if minimum loan amount and debt-to-income ratio is not considered.

How to Apply for an Emergency Loan?

1. Choose A Lender. Select a reputable lender, online or physical, that follows state laws and federal regulations.

2. Prepare Documents. Gather required documents such as pay stub, social security number, bank account information and proof of income.

3. Apply. Fill out the loan application form with personal details, employment information and loan amount. Submit online or in person.

4. Review Loan Agreement. Review the loan agreement carefully, interest rates, fees, repayment terms and due date.

5. Get Funded. Once approved get the loan proceeds directly into your bank account or prepaid card account, usually same business day.

Requirements

According to the U.S. government’s Consumer Financial Protection Bureau (CFPB), to qualify for a loan, most payday lenders require:

1. Age. Applicants must be at least the age of majority, 18 in most states, some states require 19 or 21 years old.

2. Active Checking Account. A valid and active bank account for the deposit of loan proceeds and for the lender to withdraw repayments.

3. Proof Of Income. Borrowers need to show proof of income, pay stubs, to show they can repay the loan.

4. Valid ID. Borrowers must present valid ID, social security number, to verify their identity.

How to Get the Money

1. Direct Deposit. The most common is direct deposit into your bank account. Once your payday loan application is approved, the payday lender will deposit the loan proceeds into your active checking account, usually same business day.

2. Prepaid Debit Card. Some payday lenders offer to load the borrowed amount into a prepaid card account. Good for those who don’t want to use their bank account.

3. Cash. In some cases, especially with in-person payday lenders, you can get the borrowed amount in cash. But this is less common than direct deposit or prepaid card.

4. Check. A few payday lenders might give you a check for the loan amount, you can then cash or deposit into your bank account.

Payday Loan Rates

Payday loan rates usually involve fees of $10 to $30 per $100 borrowed depending on state laws and borrowing limits. A typical fee is $15 per $100 borrowed which translates to an annual percentage rate (APR) of around 400% for a 2 week loan. For example if you borrow $300 you’ll need to repay around $345 by next payday. These rates are much higher than other types of loans like personal loans or secured personal loans.

Payday lending is allowed in 37 states, 11 states, including Connecticut, Maryland and New York, have strict regulations or interest rate caps that limit or prohibit payday lending. Some states like Arkansas and North Carolina have repealed their payday lending laws and others like the District of Columbia have banned it altogether.

18 states and the District of Columbia have usury rate caps, often 36% APR, to curb high cost payday lending. States like Nebraska, Hawaii, Illinois and New Mexico have recently passed such caps, it’s a growing trend to regulate payday loan rates.

The highest payday loan rates are in states like Texas (662%), Missouri (652%) and Delaware (639%). On the other hand, states like Oregon (140%), Maine (228%) and Iowa (247%) have lower rates. Some states like Washington and Virginia have additional regulations to limit the number of payday loans or extend the repayment terms to prevent debt traps.

Emergency Loans. Apply Online