4 Best Ways To Take Out a Personal Loan in Case of an Emergency
Written by
Jacob Wade
Edited by
Rebekah Evans
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It’s Monday morning. You’re already running late.
You back the car out of the driveway. Then it suddenly won’t go into gear.
You panic, because you know the transmission is shot (it’s been acting up), but you don’t have the money to pay thousands for the repair.
While having an emergency fund is the best scenario, there are time this is not the case. Getting access to money in a pinch is easier than ever with personal loans, but it’s important to know what your options are before getting one. Here are the four best ways to take out a personal loan in a financial emergency.
Online Personal Loans
The most flexible (and inexpensive) loans are online personal loans. These are unsecured loans that you can apply for online and get money deposited in your account as soon as the next business day.
Online lenders usually offer competitive rates and loans up to $50,000 to use for any reason. You might be able to find loans with less than a 10% APR. But your approval and rate will be dependent on having a decent income and good-to-great credit score.
If you need a larger sum of money this week, an online personal loan might be your best bet. Just watch out for high origination fees and high rates if you don’t have stellar credit.
Cash Advance Apps
Cash advance apps have become a popular way to borrow small amounts of money immediately with relatively low fees. While traditional payday loans can charge in excess of 300% APR for borrowing money, some cash advance apps charge no interest — just a low monthly fee or even no fee at all (if you don’t mind waiting a few days).
You’ll need to sign up for a cash advance app and link your bank account so the app can track the cadence of your paycheck deposits. To borrow funds (usually up to $300 or $500), you’ll need to pledge to pay it back with your next paycheck automatically. You can then borrow the money, but you’ll usually pay an “Instant Transfer Fee” if you want it same-day (up to $10 or more).
Credit Card Cash Advance
If you’re in a pinch and need cash now, most credit cards allow you to withdraw money from an ATM just like a debit card. Credit card cash advances allow you to borrow up to a set limit — giving you access to cash most anywhere in the world. This can be a good option for travel emergencies.
But just know that you’ll usually be hit with a cash advance fee — as well as a high APR. APRs on cash advances can be well over 30% APR. Be prepared to pay more in fees and interest than some other methods of borrowing for the convenience of using the card in your pocket.
Pro Tip: Unless you need cash in hand, just use a credit card and avoid the cash advance fees.
Title Loans
If you need a larger sum of money in an emergency and you own your car, you may be able to get a title loan. A title loan (also known as a “pink slip loan”) lets you borrow against the equity in your vehicle.
If you own the title to your vehicle (and don’t have a loan on it already), you can usually borrow up to 50% of the value of your vehicle. But just be aware that title loans are “secured,” meaning if you can’t pay off the loan, your lender has the right to repossess your vehicle.
Title loans may take a few days to get you the cash, but are less dependent on your credit score because it’s a secured loan. Just make sure you don’t miss any payments or risk losing your vehicle.
Should You Get a Personal Loan for an Emergency?
If you need access to actually cash, getting a personal loan can be a great way to help with an unexpected emergency. But just know that you’ll still need to pay off your loan, along with your other life bills and obligations.
Again, it’s always wise to have an emergency fund in place for these events so you don’t end up further in debt due to an emergency. But while you’re still building your savings, it might help to know your personal loan options ahead of any emergencies.
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