6 emergency reasons to borrow money

emergency reasons to borrow money

A few emergency reasons to borrow money could include debt consolidation, car or home repairs, medical bills, moving costs, or a large necessary purchase. 

Life is predictably unpredictable. You will never be able to anticipate every curveball that life throws your way. There are bound to be expenses that you don’t see coming and financial emergencies that you can’t prepare for. If you don’t already have a savings or emergency fund you can rely on in those instances, borrowing money in the form of a loan might be the solution you turn to.

Borrowing money can be a low-cost solution depending on how you go about it. If you are lucky enough to have a friend or family member lend you money to get you through a hard time, you may be able to get the money you need completely free of any cost at all. However, not everyone has a support system that can help them in that way. 

Those who can’t go to a family member for their financial needs may need to borrow money through a personal loan. Personal loans generally cost a fair amount of money through interest charges. Some personal loans are cheaper than others depending on many varying factors, including the lender and borrower.

Is Borrowing Money a Good Idea?

Borrowing money through a loan can be a good or bad idea, depending on your reason for and method of borrowing. Everyone needs emergency cash at one point or another in their life. When you don’t have emergency funds set aside to cover unexpected expenses, your only option might be a personal loan or revolving credit. 

When you borrow money through personal loans and other loans, you will typically incur costs through interest and origination fees. It’s not wise to treat emergency loans with flippancy and depend too heavily on them because they can be expensive and significantly impact your credit score.

Sometimes personal loans are the only available solution for your crisis. However, just because you determined the best solution for your current financial situation is to borrow money does not mean that you should constantly be taking out personal loans for any minor inconvenience. An emergency personal loan can be a very good idea if it is for the right reasons, rarely and thoughtfully.

Personal Loans For Emergencies

When you don’t have enough money in your savings account to handle an unexpected expense, a personal loan could help you get the cash you need quickly, especially with the significant increase in online lenders. An emergency personal loan is typically unsecured, meaning there is no collateral against which the money is borrowed. Most lenders will charge slightly higher interest rates on unsecured loans since they are riskier unless the borrowers have an excellent credit score. 

Because of the increased cost, we highly recommend reviewing all the pros and cons before taking on an emergency personal loan. 

Benefits and Drawbacks of Personal Loans

Though a secured loan might offer a lower interest rate, a benefit of an unsecured personal loan is that you don’t need to worry about any of your assets being seized for late payment. And personal loans aren’t restricted to a single purpose like most secured loans are. You can use personal loan funds for whatever purpose you need them for, which is what makes them reasonable solutions for emergency expenses. 

There are downsides to personal loans, especially if you aren’t careful in handling the loan. Unless you have perfect credit, a personal loan likely counts as high-interest debt, which means it can cost you a significant amount of money if you don’t pay it off quickly. Late payments could incur fees and severely damage your credit score if you aren’t careful. It is vital that you have a reasonable repayment plan that you are sure you can afford before going through with a personal loan. 

Can You Get a Personal Loan With Bad Credit?

You are always going to find the best interest rates on personal loans with a good credit score. That being said, getting bad credit loans from online financial institutions may be possible if you are willing to pay higher interest rates. 

Payday loans are a common solution for poor credit borrowers in need of emergency funds to make it to their next paycheck. Payday loans can be incredibly easy to get, but their convenience often comes at a price. These particular emergency loans have sky-high interest rates and extremely short loan terms. Paying off the balance by the due date can be incredibly difficult, making the loans very risky for borrowers.

6 Reasons To Borrow Money

Before taking on high-interest debt, you want to be sure it makes financial sense and that you have a reason that justifies debt. There are many reasons why someone might take out a loan, but not all of them are good reasons. Here are some reasons and situations where it might make sense to borrow money through a personal loan:

Debt Consolidation

When credit card debt becomes unmanageable, you can consolidate debt using a personal loan. Through a consolidation loan, you could get enough cash to pay off all your credit cards so that you only have one interest rate and monthly payment to worry about. Depending on several factors, you might be able to find a more affordable interest rate and payment plan with a personal loan than you had with your credit cards.

Emergency Home or Car Repairs

Some expenses can wait until you’ve got enough money in your savings account, while others require immediate attention. You can wait until you’ve saved up for a bathroom remodel, but a broken hot water heater will likely need to be fixed or replaced right away. If your car is broken down, you will need to cover the costs so you can get to and from work. Situations like these definitely justify emergency loans when you don’t have the money you need at your disposal. 

Payday Loan Alternative

If you are struggling to cover your living expenses until you get your next paycheck, you might feel like you have no other choice but to look into payday loans. Not being able to cover living expenses qualifies as an emergency financial situation, but there may be payday loan alternatives that can be better for your credit history.

There are some online lenders that offer personal installment loans to people with poor credit while giving them more than just a few weeks to pay off the loan amount. Looking for a loan like this to make it to your next paycheck will make a big difference in the financial strain of paying off the balance

Medical Bills

Medical emergencies you or your family members happen without warning. Many necessary medical bills might not be included in your health insurance coverage which is one of the most common ways that people pay for medical care,1 can completely throw off your monthly budget. Emergency loans could help you handle unexpected bills so you can pay for the treatment you or your family members need. 

Moving Costs

Moving can be expensive, especially if it is a long-distance move. Costs for a move could include a security deposit, a move-in fee, a truck rental, a moving company, and all the packing materials. If you don’t have enough cash to cover the expenses you will need to handle with your move; emergency loans could be the right solution to make it all happen. 

A Necessary Large Purchase

It is not advisable to get an emergency loan just because you want to buy the latest iPhone model. But there are certain large purchases that might justify borrowing money if they are particularly urgent and necessary. When it comes to deciding whether you should get a personal loan to pay for a large purchase, it is best to weigh your options carefully and do what you think is best based on your unique situation.

Reasons You Need An Emergency Fund 

Having an emergency fund is one of the best things you can do for your overall financial health. Building your own emergency fund is often the very first thing that most personal finance experts advise you to do when you are looking to improve your financial situation. 

Reasons for an Emergency FundDescription
Avoiding DebtHaving an emergency fund can help you avoid unnecessary debt. 
Protection in Case of Job LossA savings account can provide protection in case you or another person in your household loses their job. 
Decreased Anxiety and StressHaving solid savings can reduce your stress and anxiety. 
Improvement With Financial HealthA large part of financial health is having an adequate savings account. 

Below is more information on each topic: 

Avoid Debt In Emergencies

With an emergency fund saved up, you won’t need to worry about taking on new debt to handle those unexpected events that bring about additional expenses to your monthly budget. When unexpected expenses come your way, you can simply take care of them with your emergency fund and replenish the money you used once you are back on your feet. This will save you a significant amount of money on interest.

Protection During Income Loss

A good starter emergency fund is $1,000, but once you become more financially stable, it is a good idea to increase your savings to a couple of months worth of income. Having an emergency fund can offer you a financial cushion when you lose your job. Experiencing unemployment is exceptionally stressful, but if you have enough money to keep you afloat while you find a new job, it can be significantly easier to navigate.

Decreased Financial Anxiety and Stress

If you don’t have an emergency fund to fall back on, you might be in a state of constant stress and fear as to when the next unexpected expense might hit you. Being anxious all the time about whether you might be able to afford to repair your car if it broke down or whether you would be able to pay for a medical bill if one of your family members were to fall ill could bring down your overall quality of life. A substantial emergency fund could offer you peace of mind.

Improved Financial Health

Living paycheck to paycheck is bad news for your financial future. One of the most straightforward ways to make your way out of living paycheck to paycheck is to have an emergency fund to cover you when unexpected events mess with your monthly budget. An emergency fund can get you on the right track to minimize your debt, build your retirement savings, and make a comfortable life for yourself and your entire family.


What should I consider before taking out an emergency loan?

Before taking out an emergency loan, consider the urgency of your need, the loan’s interest rates, your ability to repay, and the potential impact on your credit score. Also, explore alternative options like negotiating payment plans or seeking financial assistance programs.

How quickly can I access funds from an emergency loan?

The speed of accessing funds from an emergency loan varies by lender. Online lenders might offer quicker disbursement, sometimes within a few business days, while traditional banks may take longer to process loan applications.

Are there specific loans designed for medical emergencies?

Yes, some lenders offer loans specifically for medical emergencies. These loans might have terms and conditions tailored to healthcare expenses, but it’s important to compare their rates and terms with general personal loans to find the best option.

Can I use a credit card instead of a loan for emergency expenses?

Yes, you can use a credit card for emergency expenses, especially if you need funds immediately. However, be mindful of high-interest rates on credit cards. If the emergency expense is large, a personal loan with a lower interest rate might be a more cost-effective option.

What are the risks of taking payday loans for emergency expenses?

Payday loans can provide quick access to cash but often come with extremely high-interest rates and short repayment periods. This can lead to a cycle of debt if you’re unable to repay the loan on time.

How does debt consolidation work in the context of emergency loans?

Debt consolidation involves taking out a new loan to pay off multiple existing debts, often with a lower interest rate. This can simplify your payments and potentially reduce the total interest you pay, making it a viable option in financial emergencies involving multiple debts.

Is it advisable to borrow money for moving costs?

Borrowing money for moving costs can be justified if the move is essential, such as for a job relocation. However, it’s important to budget carefully and choose a loan with favorable terms to avoid long-term financial strain.

Thoughts From CreditNinja

Life’s unexpected challenges can often come with unforeseen expenses. Whether it’s an urgent car repair, a pressing medical bill, or a sudden move, we understand that not everyone has an emergency fund at the ready. While loans can offer temporary relief, it’s crucial to use them wisely and responsibly. 

At CreditNinja, we believe in the importance of financial preparedness, and we advocate for establishing a robust emergency fund to mitigate future challenges. However, when you’re in a pinch and need support, we’re here to help guide you through the choices. Remember, every financial decision has long-term impacts, so ensure it aligns with your financial journey and goals. Stay informed, be proactive, and always consider the bigger picture


  1. The Challenge of Understanding Health Care Costs and Charges | Journal of Ethics | American Medical Association
  2. When Should You Get An Emergency Loan? | Forbes Advisor India

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