Pros and Cons of Emergency Installment Loans

According to Bankrate’s 2025 Emergency Savings Report, nearly one in four (24%) of Americans have no emergency savings.¹ Emergency costs like a trip to the ER or a car repair could disrupt even the most carefully planned budget. But a pricey surprise doesn’t have to be a disaster. An emergency loan may offer short-term relief to cover emergency expenses and help you get through a difficult time.

What is an emergency installment loan?

An emergency installment loan is a personal loan you can use to help you cover emergency expenses. It can be an excellent way to get funds fast in an emergency.

An installment loan provides a lump sum of money upfront that you repay in regular monthly installments that include interest (the cost of borrowing). An emergency loan typically offers a fixed interest rate and set repayment schedule, so you owe the same amount each month until the loan is repaid — as long as you pay on time, every time.

An emergency installment loan can be secured or unsecured. With a secured loan, you’ll offer collateral (something of value you possess) that the lender may take if you don’t repay the loan. An unsecured loan doesn’t require collateral. A secured loan may boost your borrowing power, potentially allowing you to qualify for a lower interest rate or larger loan amount than you might with an unsecured loan.

Whether you’re dealing with unexpected car repairs, vet bills or job loss, OneMain offers emergency loans that can help you get back on your feet after a financial crunch.

Like with other loans, many lenders allow you to check for prequalified offers before you submit a loan application. Prequalification lets you consider your options and budget before you commit to a loan. At OneMain, it only takes a few minutes to see if you prequalify, and checking won’t affect your credit score. When you submit a formal loan application, lenders will perform a hard credit check, which can cause a small, temporary dip to your credit score.

Reasons to apply for an emergency installment loan

When you have a sudden, significant expense that you’re unable to pay, an emergency loan could help. Some reasons you might apply for an emergency installment loan include:

• Major car repairs
• Home repairs that are not covered by a homeowner’s insurance policy
• Everyday bills like rent or utilities, if you’ve lost a source of income
• Bridging the gap after a job loss or missed paycheck
• Funeral expenses
• Travel expenses for an unplanned trip

Pros and cons of emergency installment loans

While an emergency installment loan could help you get extra funds, be sure to consider all the benefits and drawbacks before committing.

Pros

• Money for emergencies: An emergency loan provides an upfront lump sum, so you can take care of an emergency cost — or several — all at once. OneMain offers loans between $1,500 and $20,000.^†
• Fast funding: When an unexpected happens, an emergency loan can provide fast access to cash. At OneMain, for instance, you could get the money you need as soon as one hour after loan signing,^† with a repayment plan that works for your budget.
• Predictable payments: An installment loan has fixed monthly payments, which makes it easier for you to include them in your budget. And with a set payoff date, you’ll know exactly when you will pay off the loan if you make all your payments on time, every time.

Cons

• May be hard to repay with limited income: An emergency loan may seem appealing if you need money because you’ve lost your job. But make sure you prepare how you’ll handle repaying the loan. Committing to set monthly payments may be challenging if you aren’t earning a regular income.
• Additional fees: Like other loans, an emergency loan could have a late payment fee or prepayment penalty — a fee some lenders charge if you pay off your loan early (note that some lenders, like OneMain, do not charge prepayment penalties).² You may avoid these fees by making payments according to the terms of your loan agreement. Many personal loans also have an origination fee — a one-time fee to process the loan application. However, sometimes a loan with an origination fee may offer a lower interest rate than one without a fee, keeping the total cost of the loan lower.
• Approval requirements: Lenders generally look at factors like your credit score, credit history and income to decide if you qualify for an emergency loan. If you have no credit history or a less favorable credit score, you might not qualify for the loan amount or interest rate you want. However, it’s important to note that a limited credit history doesn’t necessarily mean you can’t get an emergency loan. OneMain looks at your whole financial picture to find an option that works for your needs.

Is an emergency installment loan right for you?

Emergency installment loans may not be right for every situation. To make the best decision for your budget and emergency, consider the following questions:

Is this a true emergency?

An emergency installment loan can be a helpful tool in a crisis, but remember, these types of loans are not meant for routine expenses. If an unpaid bill could seriously impact your life — like putting your housing at risk or delaying essential care for someone you love — an emergency installment loan may be a good fit. When your family’s well-being is on the line, a loan could offer the support you need to cover the cost and regain some breathing room.

Can you manage the monthly payments?

Always review the terms of any loan to understand what you’ll pay each month. Weigh the monthly payment against other debts and living expenses like rent, utilities, gas, and groceries. If you have any concerns that you won’t be able to make the payments, it may be worth exploring alternatives, like borrowing from a family member or researching community assistance programs.

Have you compared the costs?

Different lenders may also have varying terms and eligibility requirements, so it’s important to research and compare costs between lenders and borrowing options. Remember, checking for prequalified offers is a good way to get an idea of the loan you might expect before you submit a loan application.

How will a loan affect your future financial goals?

Unplanned debt can make it difficult to achieve other long-term money goals without a plan to get back on track. Missing payments can also have a negative impact on your credit score, which may make it more difficult to qualify for other loans or lines of credit later, so it’s important to make loan payments on time. If applying for an emergency installment loan makes it challenging to reach future financial goals, the loan might not be worth it.

Do you understand the loan terms?

Always take the time to carefully review the terms of any loan. You should understand the associated fees, loan repayment schedule, monthly payment, annual percentage rate (APR) — the yearly cost of borrowing money including interest and fees — and any other specific loan terms before you sign a loan.

Borrow when it matters most

Financial emergencies can be scary, but an emergency installment loan may be a useful tool to help you cover unexpected expenses. Always research your options before deciding on a loan that best fits your emergency needs and financial situation.

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Sources 1 https://www.bankrate.com/banking/savings/emergency-savings-report/
2 https://www.nerdwallet.com/article/finance/late-bill-payment-reported
3 https://www.bankrate.com/loans/personal-loans/true-cost-of-emergency-loans/#the-cost-of-borrowing-to-pay-for-an-emergency