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Bad Credit Loans: How To Get An Emergency Loan With Poor Credit

5-minute read

Life happens. Whether your car breaks down at a bad time or you need to cover some unexpected medical costs, there may be a time when you need to find a loan to cover an emergency. That’s where bad-credit loans can come in. 

If you have bad credit, you don’t need to automatically rule out the possibility of a loan to cover your expenses. It can be more difficult to get one, but it isn’t impossible. 

When you need a bad-credit loan to fund your financial emergency, there are many choices. Let’s take a closer look at the available options. 

Bad Credit: What It Means For Loan Approval

Your credit score is based on your credit history. So if you have a history of irresponsibly managing your credit, then you’ll find that you have a bad credit score. 

The range for FICO® credit scores is 300 – 850. Generally, anything under 670 is considered a poor credit score. If you have a credit score higher than 670, then you’ll fall into the good credit category. 

A good credit score shows potential lenders that you’re trustworthy. You have a history of responsibly repaying your loans, which can lead to better loan offers. After all, the lender wants to ensure that you’re able and willing to make the payments on your loan. 

On the flip side, a poor credit score tells the lender that you’re less creditworthy. Bad-credit loans are available to people who have poor credit scores. With a bad credit score, you can expect to have a more difficult time securing a loan. If you can find a lender that is willing to work with you, then you’ll likely face less-than-ideal loan terms. Generally, you can expect higher interest rates and lower loan amounts if you have a bad credit score. 

Although you’ll face more difficult terms in the world of poor credit loans, there are some loans worth taking on. Unfortunately, you might have trouble finding these reputable loans in the midst of some downright dangerous options. 

Loan Options For Bad Credit

It’s completely possible to secure a loan with bad credit. Before you start looking for a lender, there are a few things you should be aware of. Many bad-credit loans are offered by lenders that don’t have a great reputation. So it’s important to know what you should be looking for in a fair loan offer. 

Dangerous Loan Options

As you seek out a bad-credit loan option, there are many predatory lenders that you’ll have to wade through. 

Many of these lenders offer loans to people with poor credit without considering the long-term success of these borrowers. Often, these borrowers are ill-equipped to handle the monthly payments of the loan due to high interest rates and unfavorable terms. This can lead to the borrowers falling into more debt in order to keep their heads above water. 

Here are a few of the dangerous loan options that you should avoid if you have bad credit. 

  • Payday Loan: A payday loan is a short-term loan with an extremely high interest rate. In most cases, the loan amount is $500 or less. As the name suggests, you’ll need to repay the loan with interest on your next payday. It can be very risky to take on a payday loan. If you’re unable to make the payment, then you’ll be forced into more debt. 
  • Loans on Property: Lenders will provide you with a short-term loan that’s secured by your property. You can use your car for a title loan or any valuables around your house for a pawnshop loan. These loans will have an extremely high interest rates attached. If you’re unable to repay the loan, with interest, then you risk losing your property forever, 
  • Cash Advance: A cash advance is another short-term loan that you can take out with your credit card. If you choose to do this, then you’ll be required to repay the funds with an extremely high interest rate. The benefit of this option is that your loan is unsecured, so you don’t risk losing any of your property. 

Each of these loans could cost you significantly. Although they will provide you with cash to solve your immediate financial dilemma, they could lead to bigger problems down the line. 

Best Loan Options

Although you need to be aware of the dangerous loan options, there are still plenty of good alternatives for borrowers with less-than-stellar credit. Personal loans and payday alternative loans might be the perfect solution to your cash flow problem. 

  • Personal Loan: Personal loans for bad credit are a good option. Even with bad credit, you’ll have more time to repay your loan. Typically, these installment loan terms range from 2 – 5 years. That means that you’ll have plenty of time to get back on your feet without worrying about repaying the funds within a month or two. If you’re considering taking out a personal loan, make sure to comparison shop among lenders. 
  • Credit Union Payday Alternative Loan: If you’re a member of a credit union, you may have access to this option. Generally, these payday alternative loans come with more affordable interest rates and longer loan terms. Overall, this is a better option than a regular payday loan. 

Where To Find An Emergency Loan With Bad Credit

Emergencies loans can feel like a needle in a haystack. After all, you are running around wondering, ‘how to get a loan with bad credit.’ It is a stressful time in your life. However, it is completely possible to find emergency loans. 

The first place to check for reasonable loans is your local credit unions. Next, check out the banks in your area to determine what kinds of loans they offer for borrowers with bad credit. Some lenders may be willing to take on a portfolio loan where they hold on to a mortgage rather than selling it on the secondary market. This gives those with credit issues a better chance at approval. Take a look at multiple lenders to compare terms before deciding to work with a particular lender. 

How To Find A Bad-Credit Loan Online

In this modern world, you might prefer to seek out bad-credit loans online. Rocket Loans® is one option. Although your bad credit might affect your loan terms and approval odds, the smooth application process makes it a worthwhile place to start. 

Loan Alternatives

The bad-credit loan solution is to avoid taking out a loan altogether. Of course, this is easier said than done. However, it might be possible to scrape together the funds to cover your emergency. Take a minute to think through these options before you resort to taking out a loan. 

  • Reduce Expenses: You might have monthly expenses that could be easily eliminated from your budget. For example, you could skip dining out for a while or cancel your cable package. This short-term strategy could help you make it through a tight spot in your budget. 
  • Sign Up For a Payment Plan: If you think you need a new loan to help cover your current debts, think again. Some lenders might be willing to help you reduce your monthly payments or set up a long-term payment plan for a large bill. For example, most hospitals are willing to set up a payment plan for your treatment costs. 
  • Sell Unneeded Items: We all have extra items lying around the house. Instead of letting these collect dust, turn them into cash. You might be able to raise enough funds to cover your emergency. 
  • Ask Family and Friends: Although it can be difficult to ask people you know for help, sometimes it’s a good option. You might be able to secure an interest-free loan from a helpful family member if you ask the right person. Of course, you’ll need to make it a priority to repay this loan before things get awkward. Consider your relationships carefully before approaching someone to ask for money. 

If you’re struggling to cover a minor emergency, you need to take stock of your financial situation. Unless you want to struggle through the paycheck-to-paycheck cycle forever, you need to think about saving money. Start by building a small emergency fund to help cover unexpected expenses. In the future, you can pull from your emergency fund instead of scrambling to secure a bad-credit loan.

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