What are emergency loans?
Written by
Joe Towner
Reviewed by
Amy LancashireAn emergency loan is a fast personal loan you use to cover an urgent, unexpected cost, like a broken boiler, a car repair you need for work, or an essential bill you can't otherwise meet. It isn't a special type of product. It's an ordinary loan marketed for speed, usually unsecured, and often paid out the same day or the next working day. Because they're built around speed and are sometimes aimed at people with poor credit, they can be more expensive than standard borrowing.
Before you borrow, it's worth knowing that free or cheaper help may be available, especially if you're on a low income or claiming benefits. Here's what an emergency loan is, how it works, and the alternatives worth checking first.
What is an emergency loan?
"Emergency loan" is a description, not a regulated category. Lenders use it, along with terms like "crisis loan", "same-day loan" or "urgent loan", for any loan designed to get money to you quickly when something unexpected happens. In practice, an emergency loan is usually an unsecured personal loan: you borrow a fixed amount, then repay it in fixed instalments with interest. The size, term and cost depend on the lender and the type of loan, which is why it helps to know exactly what you're being offered. If you're new to borrowing, our guide on how loans work covers the basics.
How do emergency loans work?
Most emergency loans are applied for online, and the process is built to be quick:
You apply with your details, income and bank information
The lender runs a credit and affordability check
If approved, the money can reach your account the same day or the next working day
You repay in fixed instalments over an agreed period, from a few weeks to a few years depending on the loan
Even when a decision is fast, a legitimate lender still has to check you can afford the repayments. That protects you from taking on a loan you can't realistically manage.
What types of borrowing are used for emergencies?
Several different products get used to cover emergencies, and they vary in cost:
Personal loans – a fixed amount repaid over months or years, the cost will depend on your credit score and income
Credit union loans – community lenders with a legal cap on the interest they can charge. (More on how credit union loans work)
Arranged overdrafts – if your bank offers one, it can be a quick way to cover a small shortfall, though you should check the rate
Credit cards – useful if you already have one, particularly for spreading a cost, but cash withdrawals are expensive
Payday and other high-cost short-term credit – small sums repaid quickly. These are the most expensive option and are best treated as a last resort. See our guide on what a payday loan is
How much do emergency loans cost?
There's no single cost, because "emergency loan" covers very different products. As a benchmark, the average rate on a new personal loan in the UK was 9.09% in March 2026, according to the Bank of England, though the rate you're offered depends on the amount and your credit history.
At the more expensive end, payday-style borrowing is capped by the regulator. Under the FCA price cap on high-cost short-term credit, interest and fees can't add up to more than 0.8% a day, default fees are capped at £15, and you can never repay more than double what you borrowed. In practice, borrowing £100 for 30 days would cost a maximum of £24 in interest. Even with the cap, this is far more expensive than most other borrowing, so it's worth exploring cheaper options first.
Cheaper and free alternatives to check first
If money is tight, some of these could cost you nothing, or far less than a loan. It's worth checking them before you borrow.
Budgeting Advance (Universal Credit) – an interest-free loan from the DWP for one-off essential costs if you've been on Universal Credit for at least 6 months, or need the money to start or stay in work. You can get up to £348 if you're single, £464 as a couple, or £812 if you have children, repaid from your future payments. See Budgeting Advance on gov.uk
Budgeting Loan (other benefits) – if you're on certain legacy benefits like Income Support or income-based Jobseeker's Allowance rather than Universal Credit, you may be able to get an interest-free Budgeting Loan instead
Local welfare assistance – Crisis Loans no longer exist. Instead, your local council may run a scheme offering grants or support for essentials like food and energy. Search your council's name plus "local welfare assistance" or "crisis support" (schemes differ across England, Scotland and Wales)
Charitable grants – you may qualify for a grant that doesn't have to be repaid. The free, anonymous Turn2us grants search matches your circumstances to grants you could apply for
Talk to the people you owe – utility companies, landlords and councils might be willing to agree a payment plan if you contact them before a bill is due, and many energy suppliers run hardship funds
Free debt advice – if you're struggling to keep up, a free service can help you find a way forward. Our guide on how to get out of debt explains where to start
How to borrow more safely in an emergency
If a loan really is your only option, a few steps can reduce the risk:
Borrow only what you need to cover the emergency, not a rounded-up amount
Check the lender is authorised by the FCA before you apply. If a company isn't, avoid it
Make sure you can afford the repayments alongside your normal bills. You can work out your monthly repayments first
Avoid applying to several lenders at once. Multiple applications in a short space of time can lower your credit score, as our guide on what affects your credit score explains
Be wary of anything promising "guaranteed approval" or "no credit check". Legitimate lenders have to check affordability, so these claims are a red flag.
Frequently asked questions
There are a range of financial products available that may suit your needs. We encourage you to research your options carefully and consider seeking independent financial advice before making any decisions. This blog is for informational purposes only and does not constitute financial advice.
