Emergency Personal Loans

Unforeseen expenses can turn an emergency into a financial strain, especially if you don’t have savings to cover them. Fortunately, personal loans offer some financial flexibility during challenging times so you can get back on your feet as quickly as possible.

Let’s look at how emergency personal loans work, so you can use them to meet your financial needs when necessary.

What is an emergency personal loan

An emergency personal loan is any short-term personal loan used to cover immediate, urgent needs. While emergency loans could be secured or unsecured, unsecured emergency personal loans don’t require borrowers to provide any collateral, unlike a secured loan. Because of this advantage, as well as their flexibility and convenience, unsecured personal loans are a common choice for an emergency situation.

How emergency personal loans work

Personal loans provide one lump sum loan to qualifying applicants, who pay the loan back over time in monthly installments with interest. Lenders consider your creditworthiness and income to determine whether you qualify for an emergency loan and what your interest rate should be.

Once your application has been approved, the funds could be deposited into your account, and you’ll be free to use a personal loan in an emergency to meet some qualifying expenses you might have.

How to apply for a personal loan

Once you decide on the best lender and personal loan for your emergency situation, you can fill out an application online. If you’re uncomfortable with online applications, you could try to apply in person with your lender, but that might take longer. In addition to a hard credit inquiry, your lender will review identifying documents like a government-issued ID and proof of income.

With personal loans you usually don’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 personal loan

Before you submit an application for a personal loan, 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 loans come with an 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

Some personal loans may come with a variety of fees and penalties, including disbursement fees, late fees, application fees, and even prepayment penalties. Fees may increase the total cost of your emergency personal loan, so you should be mindful of the fees associated with different loans as you explore options.

How to use an emergency personal loan

Personal 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 personal loan may help meet your needs quickly.

Some personal 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 personal loans

You can get an unsecured personal loan from a bank, credit union or online lender. Each loan option has its 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. 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, like personal lines of credit, HELOCs allow you to withdraw funding as needed during the withdrawal period instead of as one lump sum. 

Emergency Loans: Frequently Asked Questions

How fast can I get a personal loan for emergencies?

Personal loans are designed with speed in mind. Lenders often evaluate applications quickly, usually responding within a day. After your emergency personal loan application is approved, depending on the lender, you may receive a deposit in a few hours or as long as a few weeks.

How will an emergency loan impact my credit?

Personal loans have both negative and positive effects on your credit. The application process includes a hard credit inquiry, which can reduce your credit temporarily. It’s especially important to remember this if you’re considering applying for several loans.

Personal loans also, of course, increase your overall debt, which can hurt your creditworthiness. However, making complete payments on your personal 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 personal loan with a low income?

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 and may help you secure a lower interest rate.

How much can I borrow with a personal loan?

When you take out an emergency personal 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 personal loan for you 

Emergency personal 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 educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.

Additional Resources

  • Start your personal loan application now!

  • Learn how FICO® Scores are determined, why they matter and more.

  • Review financial terms & definitions to help you better understand credit & finances.