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Are Emergency Same Day Loans a Bad Idea?

Financial emergencies often happen quickly and unexpectedly. When you don’t have the cash you need, that’s where emergency loans can come in handy.

Emergency loans are a type of personal loan that are dispersed fast so you can use them for urgent and unplanned expenses. They include things such as your car breaking down or an illness.

But, finding (and obtaining) the right loan for you isn’t always that simple. Borrowers with strong credit may find it easier than those with lower scores. That said, it isn’t impossible even if you have credit problems.

The pros and cons of emergency same-day loans

When you need fast cash for something unexpected, an emergency loan could be your saving grace. It is important to understand the pros and cons of emergency same-day loans before diving into something that could potentially make your financial situation worse.


Many people like emergency personal loans because of their flexibility and speedy application process. Most lenders have online applications, so you can apply anywhere, at any time. Plus, the application doesn’t require as much documentation compared to other types of loans.

Be sure to check with the lender about the time frame of application to funds hitting your account, especially if you need the funds fast. This can vary from lender to lender. Once the cash is directly deposited into your account, you can use the money for any reason. Even consolidating your debt to handle an emergency situation.

Emergency loans are usually also flexible when it comes to repayment terms. Your loan period will be determined when you’re first approved for the loan and is stated in months. Shorter loan periods are more expensive, but also mean spending less on interest over time. Longer repayment periods come with a lower monthly payment but take longer to pay off.

Perhaps the best reason to opt for an emergency loan is they don’t require collateral. The loans can be either secured or unsecured. Most are unsecured, which means you won’t have to use any assets like your home or car to back the loan in case you default. A secured loan simply means that there is collateral backing the loan. That said, applying for a secured loan could get you a better interest rate.


Emergency personal loans come with a list of advantages, but there are a few drawbacks. The first to consider is that this type of loan comes with higher interest rates. Unsecured loans are based on an applicant’s creditworthiness and ability to repay. In other words, it’s riskier for a lender to issue this kind of loan, so you’ll see that reflected in your bill.

If you have a good credit score, you’ll have an easier time getting a lower interest rate. Credit history, income, and your current amount of debt could also affect your application.

Once approved for the loan, lenders may limit the amount they give you if they find you seem like a risky candidate. Job instability and a low credit score are two factors that would show this.

Applying for emergency loans with bad credit

If you’re worried about your credit score inhibiting you from obtaining an emergency loan, don’t fret just yet.

A short-term loan could be an option for you if you can’t get an installment loan because of your bad credit or you only need to borrow a small amount of money (less than $500).

This type of loan is repaid in a single lump sum that includes the principle and any interest charges. They do have very high APRs though, which means extra finance charges that could trap you in debt.

So, it’s very important to compare your options before committing to a lender. This is the most expensive way to borrow money, so if you know you can’t pay it back by the due date, you might want to reconsider.

Alternatives to unsecured personal loans to avoid

Sticky situations happen, we get it. While there are options for unsecured personal loans out there, make sure to avoid these to prevent getting into further financial trouble.

Payday loans

A payday loan is a short-term, high-cost loan that you can use for immediate cash needs. Their name comes from being able to cover your financial needs until your next paycheck. You only need to show proof of income and an active bank account to get one.

>> Learn more about the pros and cons of payday loans.

Auto title loans

An auto title loan is a secured loan where borrowers use their car title as collateral. It’s a short-term, high-interest loan that usually doesn’t require good credit to get. In fact, your credit score might not even be checked beforehand.

One catch to note is you have to temporarily surrender the hard copy of your vehicle title in exchange for the loan amount. 

Hard money loans

A hard money loan could be helpful if you need money fast for a real estate venture or if you’re looking to quickly grow as an entrepreneur. It’s secured by real property and allows borrowers to take out a loan without using a traditional mortgage lender.

The loan comes from an individual or an investor who will give you the money based on the value of the property you’re using as collateral. They are often used as a last resort or until the borrower can secure enough permanent financing.

>> Learn more about the pros and cons of hard money loans.

HELOCs and equity loans

A home equity loan and HELOC allow you to leverage the equity of your property to borrow money. A Home Equity Line of Credit or HELOC works in the same way as revolving credit, meaning the lender creates a borrowing limit based on your equity. You can use the money as you wish and only have to pay interest on the money you actually used.

A home equity loan enables you to borrow money against the equity in your property that you pay back in fixed monthly installments. The amount of money you can borrow is usually pretty high, with a longer repayment period and lower interest rates. This type of credit could be a threat to your property if you default on the loan. Your lender has the right to seize and repossess your property if you don’t pay.

>> Read more about these dangers: “The Hidden Traps within HELOC’s and Equity Loans

Consider these alternatives before taking out an emergency loan

There are other ways to get the cash you need in an emergency situation. If you’re finding it difficult to get an unsecured personal loan or you want to avoid using collateral, here are a few options to consider.

>> Learn more about how personal loans work.

Local nonprofits & charities can help

It’s always ok to ask for help. And that’s what local nonprofits and charities are for!

If you have any reason to think people would be sympathetic to your situation, don’t hesitate to reach out to an organization that could help.

Many programs offer assistance with rent, housing problems, and medical emergencies. Others could even help with employment opportunities and job training.

Another option to consider is fundraising yourself. With websites like GoFundMe, raising money (also called crowdfunding) is simpler and faster than ever before. You’d be surprised by how many people in your local community want to help when you need it most!

For medical debt emergencies, consider your options

If you’re dealing with an unexpected medical emergency that you don’t have the cash for, there are specific medical repayment plans that could work.

Check with your hospital to see if they can set up a gradual repayment plan for you. That way, you can pay off the expenses over time instead of all at once.

Your and the health of your loved ones is the most important thing. Don’t feel guilty or scared of paying for treatments if you can’t afford them. Always communicate with the hospital and discuss your options, such as discounts for paying promptly or applying for a medical loan. 

Loaning from a family member

Sometimes the hardest thing to do is ask for help. There’s a sense of loss of pride, or perhaps you just don’t want people to know about your struggles.

If turning to friends and family when facing financial hardship is an option, you might want to give them more faith. It’s easier than going to a lender.

Be sure to create a repayment plan and get it in writing before accepting any money. You want to make sure everyone is on the same page about expectations and paying back the money. 

Speak with a financial coach and get a personalized financial action plan

Another great resource is a financial coach who can create a personal action plan! They’ll first likely look at your savings and then create a goal to save towards. This will include creating a realistic budget for you to follow.

Take the time to write down how much you spend each month on essentials (like rent, car payments, utilities, etc) and how much you’re making. Doing so might help you find ways to cut back and meet your savings goal even faster. Budget-tracking apps are a great way to do this.

You might even want to create a separate savings account that you put additional income into, such as cash from your birthday, a bonus at work, or any other money you can use for later emergencies. Then sit back and watch your savings grow!

Abigail Masterson

financial coach with clipboard

Get financial freedom! Talk to a financial coach for free!