How to apply for an emergency loan
Once you decide on the best lender and emergency loan for your situation, you can fill out an application online. If you’re uncomfortable with online applications, you can apply in person, but that might take longer. In addition to a hard credit inquiry, your lender will review identifying documents like a state ID and proof of income.
You usually won’t have to wait long to receive an approval. Some lenders may respond to your application in as little as 60 seconds.
How to choose an emergency loan
Before you submit an application, do your research. Read customer reviews, compare lenders and consider the following factors.
APRs
APRs, or annual percentage rates, provide a straightforward figure for comparing the costs of various loans. APRs are calculated by combining fees and interest rates over a one-year period. A loan with a lower APR will cost you less over time, but you may still pay more interest on a longer repayment period than a shorter repayment period.
Repayment terms
No matter your situation, never choose a plan with monthly payments you will struggle to afford. Because of your loan’s interest rate, choosing a longer repayment term means paying more overall. Short repayment terms have higher monthly payments but save you money on interest.
Qualification requirements
Pre-qualification can help you determine whether your credit qualifies you for a loan. But pay attention to other requirements like income or employment to ensure you find the best fit.
Penalties and fees
Emergency loans can come with a variety of fees and penalties, including disbursement fees, late fees, application fees, and even prepayment penalties. Fees increase the total cost of your emergency loan, so you should be mindful of the fees associated with different loans as you explore options.
How to use an emergency loan
Emergency loans offer a lifeline to help you face various unexpected events. If storm damage makes your home unsafe, for example, or if your car breaks down and you have no other way to get to work or school, an emergency loan can meet your needs quickly.
Some personal emergency loans include stipulations for how you can apply the funds. For instance, some personal loans prohibit using the money to pay off tuition or other educational expenses. So, it’s important to understand a loan’s terms in advance.
Alternatives to emergency loans
You can get an unsecured personal loan from a bank, credit union or online lender. Other loan options have their own advantages and disadvantages, so compare them before you decide.
Personal line of credit
A personal line of credit could be a good option if you’re facing an ongoing issue with an indeterminate cost, like a long-term home renovation. Personal lines of credit offer you access to a pool of money with a predetermined limit, so you can withdraw money as needed, but the interest rate may be variable during the draw period. Financial institutions may provide secured personal lines of credit, which require collateral, and unsecured personal lines of credit, which may have higher interest rates but don’t require collateral.
Home equity loan or HELOC
If you own your home, you can take out a home equity loan or home equity line of credit against the value of your home’s equity. Borrowers receive a lump sum that they pay back in installments over time. Home equity lines of credit (HELOC) are similar to home equity loans in that you can take them out against your home’s equity. However, unlike personal lines of credit, HELOCs allow you to withdraw funding as needed during the withdrawal period instead of as one lump sum. Additionally, unlike home equity loans that have fixed interest rate, HELOCs have variable interest rate.
Emergency Loans: Frequently Asked Questions
How fast can I get an emergency loan?
Unsecured personal loans are designed with speed in mind. Lenders often evaluate applications quickly, usually responding within a day. After your emergency loan application is approved, you may receive a deposit in a few hours or as long as a few weeks.
How will an emergency loan impact my credit?
Emergency loans have both negative and positive effects on your credit. The application process for a personal loan includes a hard credit inquiry, which can lower your credit score temporarily. It’s especially important to remember this if you’re considering applying for several loans.
Emergency loans also, of course, increase your overall debt, which can hurt your creditworthiness. However, making complete payments on your emergency loan on time each month can improve your credit. Furthermore, by improving your payment history and debt-to-income ratio, your credit will improve as you repay more of the loan.
Can I get an emergency loan with a low income?
It depends on each individual’s circumstances. Personal loans typically include income requirements, so lenders can minimize their risk of non-payment. Good credit can increase your likelihood of loan approval even if your income is low. However, you still have options if you’re concerned about both low income and bad credit. Seeking a co-signer could improve your likelihood of approval.
How much can I borrow with an emergency loan?
When you take out an emergency loan, it’s important to consider both the long-term costs of your emergency and your budget. Maximum loan amounts vary based on the lender. In order to minimize your debt, you should try to take out only what you need to cover your emergency.
Find the right emergency loan for you
Emergency loans can help you overcome temporary financial hurdles and get back on track quickly.
Citi offers personal loans to both existing and new Citi customers who meet specific eligibility criteria, including an established credit and income history, along with additional factors determined by Citi. If you think you could benefit from a Citi Personal Loan, apply online today.
This article is for general educational purposes. It is not intended to provide financial or tax advice. It also is not intended to describe any Citi product or service. You should refer to the terms and conditions financial institutions provide for various products. Please consult your tax advisor with any tax questions. Citi is not a tax advisor.
