Key takeaways

  • Personal loans can help bridge the financial gap following a natural disaster by providing quick funding and more affordable interest rates than other credit products.
  • Because personal loans are unsecured, your approval is based on your creditworthiness. If you have less-than-stellar credit, you could end up paying steep borrowing costs.
  • If you’re experiencing financial hardship due to a federally-declared disaster, you can also reach out to several government agencies, as well as non-profit organizations for help.

Natural disasters due to extreme weather have become increasingly more frequent. According to the National Centers for Environmental Information, the U.S. has experienced over two-dozen weather or climate-related disasters in 2023 alone, each exceeding $1 billion in losses.

Private insurance and government loans can help you get back on your feet in these kinds of scenarios. However, aid through these options can take a while to process, and there are usually restrictions attached. Personal loans, on the other hand, offer quick funding and flexible spending. This makes them a great alternative to cover urgent expenses after a natural disaster.

4 ways that a personal loan can help after a natural disaster

Personal loans are a type of installment debt — they come with interest rates and fixed repayment terms. Interest rates can be as low as 6.4 percent and repayment terms can range from 12 months to 84 months — or even longer. They’re typically unsecured, and you can get one at your local bank, credit union or through an online lender.

Here’s some instances where personal loans can bring relief after a natural disaster.

Immediate Financial Assistance

Spoiled food and property damage are some of the most common expenses Americans have incurred over the last decade due to extreme weather, according to a Bankrate survey.

Although the Small Business Administration (SBA) offers disaster loans that can help pay some of these costs, eligibility requirements can be stringent. On top of that, application processing can take up to three weeks, and several more days for you to get the funds disbursed — if approved.

Most personal loan lenders offer same-day decisions. The application process can be completed 100 percent online, and it shouldn’t take you more than a few minutes to fill out the entire form.

What’s more, lenders like SoFi and LightStream, offer same-day funding, which can be a lifesaver in a time of crisis. Additionally, you can use the funds however you see fit — a flexibility you typically lack with other forms of aid, such as insurance claims or government loans.

Mortgage Rates Up
Bankrate insights
More than 1 in 2 U.S. adults (57%) say they have incurred costs due to an extreme weather event over the last decade.

Rebuilding property

Some repairs, like replacing a broken window, can cost as little as $175. But if your home suffers extreme damage, such as a collapsed roof, repairing this could cost you anywhere from $20,000 to $30,000.

Personal loan amounts typically range from $1,000 to $50,000 — though some lenders offer loans of up to $100,000. Repayment terms are equally flexible, sometimes extending up to seven years or more. Personal loans offer much lower interest rates than other credit products, such as credit cards. The combination of low interest rates and long repayment terms can make pricey repairs more affordable, not only on a monthly basis but also in the long term.

Consolidating and managing debt

It’s not uncommon to use your credit card in case of an emergency if you’re tight on cash. But credit cards have some of the highest interest rates in the market.

If you’ve racked up credit card debt to pay for recovery-related expenses, you can use a personal loan to help you get out of debt faster, plus save money along the way. That’s because personal loans have an average interest rate just above 11.5 percent, compared to 20.93 percent, which is the average APR on a credit card. Additionally, by consolidating your debts with a personal loan, you’re essentially combining multiple accounts into one, which can ease repayment.

That said, to get the lowest rates, you’ll need to have good- to- excellent credit and a stable source of income. Otherwise, it may not be worth it to apply for a debt consolidation loan.


Money tip: Set up automatic payments to keep your debt consolidation loan current. Some lenders also give you a rate discount for selecting this option, making your debt cheaper.

Aiding in financial stability

Borrowing money to help regain financial stability may sound counterproductive, but it can be a good idea in certain situations. If you don’t have enough in your emergency fund to cover for costly repairs or to replace necessary equipment for work, taking out a personal loan can help you bridge the gap.

You can also use any leftover money to build a small nest egg, while you get back on your feet. But for this to work, you must have an effective repayment strategy. If not, you could risk defaulting on your loan, which will inevitably affect your credit and could worsen your financial situation.

Rates Down
Bankrate insights

60% of Americans surveyed feel that they are behind on their emergency savings.

Additional resources for disaster victims

Personal loans can be a way to bridge the financial gap in case of an emergency, but they’re not the only option available for relief — nor should they be the only option you consider.

It’s important to exhaust other forms of free aid, such as grants from government agencies and national, as well as local non-profit organizations, to minimize costs. This is especially true if you’re in a tough economic spot where you can’t reasonably afford to take on additional debt.

If you’re experiencing economic hardship as a result of a federally-declared disaster, check out the following sources for help:


  • A hardship loan is a type of financial assistance which features lower interest rates and more gracious terms than conventional loans for those experiencing financial difficulties. These can be related to employment loss, unexpected medical bills and natural disasters, among other scenarios. You can get a hardship loan at a local bank or credit union, although some employers and other financial institutions may offer these as well.
  • Although it will require some digging, you can still get a personal loan with bad credit. That said, bad credit loans tend to come with higher interest rates and fees than traditional loans because the lender is assuming more risk. Shop around for rates and prequalify with at least three lenders to ensure you get the best offer for your situation, without further damaging your credit.
  • To qualify for FEMA’s disaster relief fund, you must satisfy the following:
    • Be a U.S. citizen, a national non-citizen or a qualified non-citizen.
    • Have a social security number or employer identification number.
    • Be able to prove that the damaged property is your primary residence.
    • Have unmet need after insurance.
    You can check out the full list of requirements by visiting
  • Personal loans currently have an interest rate of 11.52 percent, according to Bankrate. However, the rate you’ll get can fluctuate between 6 percent and 36 percent, depending on factors such as your credit score and income, the lender you choose, loan amount and repayment term.