Life is full of surprises, and not all of them are cheap. Maybe your pet ate something that required an unexpected trip to the vet, or maybe your car engine blew up on the way to work. Either way, you’re facing a big expense that just can’t wait. If your savings won’t stretch enough to cover it, you might be considering an emergency loan. This type of finance can get you fast, easy access to the funds you need without having to wade through lengthy application processes.
But what exactly counts as an emergency, and how do you know if you’re eligible? In this guide, we’ll explore the origins of emergency loans, what you can use them for, as well as how to apply, even if you’ve got bad credit.
This guide provides general information only and may not be appropriate for your specific situation. For personalised advice, consult a qualified financial professional.
Overview:
- What is an emergency loan?
- What can I use an emergency loan for?
- Other options for emergency finance
- How much can I borrow?
- Application process
- Who is Swoosh Finance?
- Emergency loan FAQs
What is an emergency loan?
An emergency loan is a type of personal loan that you can use for anything you didn’t see coming. In an ideal world, we would all have a safety net of savings we could dip into whenever any unexpected expense came along. Unfortunately, between the rising costs of housing and groceries, that just isn’t a financial reality for many people. When these sudden situations arise, emergency loans from a lender like Swoosh can get you the money you need ASAP.
But before we look at the specifics of emergency loans, let’s take a step back and explore the origins of personal loans in Australia.
History of personal loans
The general practice of money lending stretches all the way back to ancient Mesopotamia. But how we access them has changed a lot since then, not to mention what we use them for! Personal loans always existed in Australia, but it wasn’t until the late 1980s and 1990s that financial reforms gave everyday Aussies easier access to credit. People started taking out personal loans to pay for everything from medical bills to unexpected home repairs.
But for the most part banks and lenders still used paper application forms that could often take days to process. The 2010s solved that problem as a surge of online lenders and digital finance platforms emerged to make the application process simple. Online lending meant borrowers could apply, upload documents, and find out whether they were approved in hours rather than days.
The introduction of Comprehensive Credit Reporting (CCR) opened the door for even more Aussies to access finance, even if they had bad credit or no credit history. One major difference between personal loans and other types of finance, like home or car loans, is that they can be used for almost anything—even to cover you in emergencies.
Secured vs unsecured emergency loans
Emergency loans are mostly divided into two categories: secured and unsecured loans. Secured loans are something we’re all familiar with, even if we don’t know them by that name. A secured loan is backed by an asset, such as a car, which is used as collateral against the loan. Some common examples of secured loans include car and home loans, where the loan is secured by the asset you’re purchasing. But personal loans can be secured too, as it lowers the risk for the lender. As a borrower, secured loans might give you:
- Access to more funds, depending on the type of asset
- A lower interest rate compared to an unsecured loan
- Better chance of approval, particularly for borrowers with lower credit scores
An unsecured loan doesn’t require you to put up an asset as collateral against the loan. Instead, more weight will be put on your current financial situation, income, debt-to-income ratio, and credit score. Unsecured loans can come with higher interest rates and lower borrowing limits to protect the lender.
If you’re comfortable with the risk and have an asset you can use as collateral, a secured emergency loan can be a good option. But remember that a secured loan carries the risk of losing the asset you used as collateral if you fail to meet repayments. If you prefer not to risk losing your asset and still need cash fast, an unsecured loan might be the best option. Make sure you weigh the pros and cons before making a decision.
Where can I get an emergency loan in Australia?
In Australia, there are several options available if you’re wondering where to get an emergency loan. These can include traditional banks, credit unions, online lenders, and community organisations that offer financial assistance programs. Each option has different eligibility criteria, application processes, and loan features, so it’s important to compare your choices carefully. Responsible lenders will assess your financial situation to ensure the loan is suitable and affordable, and may consider factors such as your income, expenses, and credit history before approving an application.
What can I use an emergency loan for?
There are many ways to define an emergency, but for the purpose of emergency loans, lenders like to keep things simple. You can use an emergency loan for almost any unexpected expense, even if it isn’t life or death. Some popular ways to use an emergency loan include:
Car repairs
Whether your old clunker has hit one too many potholes, or your brand-new vehicle has broken down right outside the car yard, an emergency loan can help you get back on the road fast.
Medical expenses
You can’t always time a trip to the emergency room. And even though Australia is lucky to have a universal health insurance scheme, it doesn’t cover everything. Using an emergency loan means you can spend less time stressing about money, and more time recovering.
Home repairs
When it comes to DIY home repairs, it seems like everything that can go wrong will go wrong. But even if you’re not planning a renovation, burst water pipes or broken electricals can hit at any time. Emergency loans help you pay for repairs so you don’t have to live by candlelight and cold showers!
Rental bonds
Moving is an expensive time, especially when you need to fork out a rental bond before you’ve had the previous one refunded. An emergency loan can cover the gap between to help you secure your new home.
Dental payments
Nobody is ever excited about a trip to the dentist, especially when you get hit with a bigger bill than you were expecting. Some dentists now offer payment plans to help, but an emergency dental loan can cover it all in one hit.
Vet bills
Our furry (or feathery, or scaly!) family members don’t always get sick or injured at convenient times. From emergency surgeries to unexpected medication costs, vet bills can add up quickly. While there are a few different ways to get help with vet bills, an emergency loan can help give you peace of mind by covering costs straight away—so your pet gets the care they need without delay.
Other options for emergency finance
When you’re in an emergency situation, it can be hard to think through all the options available to you. But emergency loans aren’t the only way to pay for unexpected expenses. Below we’ve explored a few different options to help you find the best path forward.
- Borrow from friends and family: tapping into your support network can be a solution to emergency situations. If you’re asking friends or family for money, make sure you have a frank and honest conversation beforehand. Clearly set out the terms like the amount you’ll borrow, and how soon you’ll be able to pay it back.
- NILs: No Interest Loans, or NILs for short, are offered by local community and not-for-profit organisations across Australia. They give eligible Aussies access to finance with no interest, fees, or charges. Ask your local charity or community group to find out whether you’re eligible.
- Negotiate payment plan: if you get in touch with your creditor or provider and explain your situation, they might offer the option of a payment plan. As long as your offer is reasonable and you keep up with payments, most organisations will work with you to find an arrangement.
- Centrelink payments: Centrelink has financial support options for people going through a crisis. It’s best to call them as soon as you can, as there are often waiting periods associated with these types of payments.
- Sell assets: while not ideal, we all probably have some things lying around we could sell for extra cash. Old electronics or furniture might be able to get you over the line when an emergency expense comes calling.
How to build an emergency fund
An emergency fund might not be able to help you right now, but it can be a strategy to prevent unexpected bills or car breakdowns from devastating your finances in the future.
A good target to aim for is to have enough in your emergency fund to cover three months of living expenses. That might sound unachievable right now, but even if you can’t save much in the beginning, it’s better to make a start and build healthy financial habits. By putting aside as little as $20 a week, you’ll have over $1000 by the end of the year. It might not cover three months of expenses, but it can give you some breathing room for car repairs and medical expenses.
Loan amounts: how much can I borrow?
How much you can borrow for an emergency loan depends on the loan provider, as well as your individual circumstances. Some lenders will offer higher amounts up to $30,000, while others will offer lower amounts. Some factors that might affect how much you can borrow include:
- Your current financial situation
- Your employment status
- The eligibility criteria of the lender you apply with
At Swoosh, you can expect emergency loans between $2300-$5000. And since we’re committed to responsible lending practices, you’ll have peace of mind knowing we’ll only approve loan amounts that you can reasonably afford to repay without added financial stress.
Interest rates
Interest rates are an important part of any lending decision, so it’s important you understand exactly how much you’ll be asked to repay. Some lenders offer fixed interest rates to keep your repayments the same throughout the life of the loan, while others may have variable rates that go up or down depending on market conditions.
Interest rates for secured emergency loans will usually be fixed and lower than those for unsecured loans. However, as with the borrowing amount, your interest rate will also depend on a number of factors such as:
- The lender’s policies
- Your credit history
- Your financial circumstances (including income-to-debt ratio)
Remember to always check the comparison rate when comparing interest rates between lenders. The difference between interest rates and comparison rates is that the comparison rate will usually take into account all the other fees and charges that come with the loan. That gives you a more accurate picture of the true cost of the loan than simply looking at the interest rate.
Here at Swoosh, we use fixed rates for our emergency loans, making repayments more predictable to keep your budget simple. But it’s a good idea to explore all your options to find the best deal for your circumstances.
Application process: how to get an emergency loan
If you’ve made it this far, you might be thinking an emergency loan is right for you. But what does the application process look like, and how does it work once you click apply? Most online lenders like to keep things as simple as possible to help you get what you need fast. The process is different for every lender, but there are some common steps you’re likely to encounter. Here’s what you can expect when applying for an emergency loan:
- Provide personal and financial details: Usually you’ll start by filling in some basic information with an online application form. Expect questions about emergency contacts, as well as details related to your employment and income.
- Information about your asset: If you’re securing the loan with an asset, like a car or other vehicle, you’ll generally have to provide the registration, make, and model. If you’re applying for an unsecured loan, you won’t have to worry about this step.
- Supporting documents: Lenders need to verify your identity by asking for ID, bank statements, or payslips. It might speed up the application process if you have these things ready before you apply.
- Assessment: All the information you’ve provided so far will be reviewed. If there’s any doubt, the lender might request additional information from you at this stage.
- Review your offer: If approved, you’ll receive a loan agreement. Make sure you read through any agreement carefully, paying attention to all the terms and conditions before you accept and sign.
- Receive funds: Once you’ve accepted your offer, you’ll get your funds! Bank transfers usually happen within the hour, but they can take up to two business days.
Swoosh makes the application process easy with just three simple steps you can complete 100% online! That means you can apply from home, work, or on the go.
Emergency loans for bad credit
Bad credit might limit your options for finance, but it doesn’t cut you off completely. Lenders who offer emergency loans might have options for borrowers with bad credit. These lenders are typically more interested in your current financial situation, taking into account things like:
- Your employment and income
- Your current expenses
- The value of any assets used to secure the loan
By taking a more holistic view than other lenders, lenders can offer emergency loans to borrowers dealing with bad credit and other financial situations.
Who is Swoosh Finance?
We’re the small loans provider making emergency loans easy with simple online applications and fast approvals, even if you have bad credit. As an Aussie lender, we believe in giving everyone a fair go, and we think your credit history should remain just that—history. It’s why our team of assessors take the time to review every application, rather than let an AI algorithm sort our customers into convenient boxes.
So when life throws you a curveball, we’ll come to the rescue with fast, easy access to emergency cash when you need it most. Apply online today to get the ball rolling.
Emergency loan FAQs
Can I get a $4,000 loan with bad credit?
Yes, it’s possible to get a $4,000 emergency loan with bad credit, but approval may depend on your current income, expenses, and overall financial situation. Some lenders may also require a secured asset or offer lower loan amounts for higher-risk borrowers.
Does bad credit go away after 7 years?
Some negative entries can be removed from your credit report after a certain period—often around five to seven years for defaults and more serious listings—but this doesn’t erase your entire credit history or guarantee a perfect credit profile. Different types of information remain on your report for different lengths of time, and lenders may still look at your broader financial history when reviewing an application.
Is it possible to get a $2,000 loan with bad credit?
Yes, some lenders offer small emergency loans for borrowers with bad credit. Approval may depend on your ability to repay the loan, your income, and your overall financial position.
Is it possible to borrow money without a credit check?
Most responsible lenders will check your credit report as part of the assessment process. This is required under responsible lending laws to ensure the loan is suitable and affordable for you.
How can I borrow a small amount of money quickly?
You may be able to apply for a small emergency loan online, where the application process is digital and decisions can be made quickly. Having your identification and financial documents ready can help speed up the process.
Can I get a loan if I am currently unemployed?
It may be more difficult to get a loan without employment, but some lenders will consider alternative sources of income such as government benefits or other regular income streams. Each application is assessed on a case-by-case basis.
