If life happens and you need to borrow money, you have options. But if you have less-than-perfect credit, you’ll generally have to look beyond traditional personal loans from banks and credit unions to get the help you need.

An emergency loan can help you get back on track and possibly rebuild your credit. Plus, some options are designed to help credit-challenged borrowers find relief.

Payday-alternative loan

Offered by select federal credit unions, payday-alternative loans are available in small amounts and come with short repayment periods. You can borrow up to $2,000, typically payable over one to 12 months.

The interest rate you’ll get depends on your credit score, but it’s capped at 28 percent. To apply, you have to be a member of a credit union offering this loan product.

Benefits

  • More competitive interest rates than payday loans.
  • Application fee cannot exceed $20.

Drawbacks

  • Credit union membership required.
  • Small loan amounts.

Who it’s good for

Credit union members with lower credit scores who need a small loan and can’t get approved elsewhere for a personal loan with competitive terms.

Credit card cash advance

Some credit cards have a cash advance feature that lets you pull funds from your credit line. You can visit an ATM or a bank branch to withdraw the funds you need – up to the cash advance limit or the available credit on your card, depending on the card issuer’s guidelines.

Credit card issuers charge a transaction fee, usually between 3 and 5 percent, to use this feature. Plus, you’ll immediately accrue interest on the funds you borrow since there’s no grace period.

Benefits

  • Immediate access to cash.
  • No application or credit check required.

Drawbacks

  • Cash advance fee.
  • Higher APR and no grace period.

Who it’s good for

Cardholders with available credit that need to access a small amount of cash and can pay it back quickly.

Payday loan

Payday loans are short-term unsecured loans for small amounts. Most are limited to $500 and due by your next payday or within two weeks. You likely won’t need to undergo a credit check to get approved, making payday loans easily accessible to borrowers with bad credit.

That said, lenders charge hefty interest rates to take out a payday loan. Furthermore, payment is often required by ACH withdrawal, and not having the funds available when the loan becomes payable often results in fees from your financial institution. And if you live in a state that allows rollovers, it comes at a price that can keep you trapped in a vicious debt cycle.

Some states have completely banned payday loans. Others impose lending restrictions that outline limits on interest rates and fees.

Benefits

  • No credit check.
  • Funding as soon as a few hours.

Drawbacks

  • Triple-digit interest rates on some loans.
  • Steep fees for rollovers.
  • Usually doesn’t help build credit.

Who it’s good for

Consumers who’ve exhausted all other options and are confident they can repay the loan in full by the due date.

Title loan

Title loans are secured and require you to hand over the title to your vehicle as collateral in exchange for cash. Most lenders let you borrow between 25 percent and 50 percent of your car’s value.

Like payday loans, title loans should also be used as a last resort for several reasons. You risk losing your vehicle if you cannot keep up with the loan payments. These loans also come with high interest rates, and you could get a short repayment period that places a strain on your wallet if the monthly payment is steep.

Benefits

  • Funds available as soon as the same day.
  • Often accessible without a credit check.

Drawbacks

  • Risk of repossession.
  • High borrowing costs.
  • Usually doesn’t help build credit.

Who it’s good for

Individuals who have no other alternatives to access the cash they urgently need.

Nonloan options to consider

If you’d prefer not to use credit to cover a financial emergency, these non-loan alternatives could work:

  • Get help from a charity or local nonprofit: Call 211 to learn more about financial resources that may be available in your local area or through your state.
  • Request a paycheck advance: If you’ve been at your job for a while, ask your employer for an advance on your next paycheck.
  • Ask a friend or relative for a loan: They may be willing to give you an interest-free loan, but be sure to put the agreement in writing.

Do your research before applying

Financial emergencies can be stressful and overwhelming. Unfortunately, some fraudsters prey on innocent consumers by offering illegitimate or predatory loan products that lead to even more financial distress. But you can avoid falling victim to these deceptive tactics by taking the time to carefully consider your options.

It’s equally important to thoroughly research the lenders on your list. Conduct an online search to learn more about their reputation, and check the Better Business Bureau’s website to view their status. You can also refer to this list of options to get started with your search.