Loans you can apply for in order to pay bills

When bills pile up, it can be stressful trying to figure out how to make ends meet. From utility costs and credit card payments to rent and medical bills, every regularly scheduled—and unexpected expense—becomes a burden. 

If your savings aren’t enough to cover these costs, you might be wondering if you can get a loan to pay your bills. The good news is there are many options that can help you get through tough times. However, what you qualify for and the terms you receive will depend on the product and your creditworthiness as a borrower. 

This article will explore various loans you can apply for to pay your bills and alternative solutions that may also meet your needs.

Can I get a loan to pay my bills?

Yes, you can get a loan to pay your bills. These financial tools come in different forms and can be used for nearly any purpose, including covering monthly expenses. 

However, it’s essential to consider whether taking out a loan is the right option for you. While it can help you catch up on bills, a loan adds debt that you’ll need to repay with interest. Before applying, understand the loan’s terms, including interest rates, fees, and repayment schedules. 

Be sure to shop around and prequalify where possible. 

Loans you can apply for in order to pay bills

Personal loan

Personal loans are versatile and can typically be used for any reason—paying bills included. Since these loans are unsecured, eligibility depends on your creditworthiness as a borrower. There are various lenders who offer personal loans for bad credit—Figure, Moneylion—however, for the best terms and rates, you'll need a good credit score and decent income.

Repayment consists of fixed monthly payments over a 1 to 7-year term. Since you begin making payments almost immediately, a personal loan can be helpful if you know your financial situation will quickly improve or you can handle adding more to your budget.

Pros:

• Flexible usage for various expenses
• Approval and funding in just a few business days
• Potentially lower interest rates compared to credit cards

Cons:

• Requires good credit for the best rates
• May come with origination fees
• Adds additional monthly payments

Payday alternative loan (PAL)

Traditional payday loans can lead to a cycle of debt that is pretty difficult to break free from—instead, borrowers should look to a safer and more regulated alternative, a PAL. PALs are small-dollar loans offered by federal credit unions.

Repayment can range from a few months to a year and consists of fixed monthly payments. PALs can be a good option if you need a small amount of money quickly.

Pros:

• Lower interest rates than payday loans
• No rollovers allowed, reducing the risk of a debt cycle
• Designed for short-term borrowing needs

Cons:

• Borrowing limits typically capped at $2,000
• Must be a credit union member for at least one month (for some PALs)

Peer-to-peer (P2P) lending loan

Peer-to-peer (P2P) lending loans connect borrowers directly with individual investors through online platforms like LendingClub, Prosper, or Upstart. It's a strong alternative option for those who may not qualify for traditional loans, as P2P lenders often have more flexible credit requirements. Borrowers apply for a loan on the platform, and investors fund the loan based on the borrower's risk profile.

It's essential to compare offers across different platforms, review all fees, and ensure you understand the repayment terms before accepting a loan.

Pros:

• Flexible credit requirements
• Transparent loan terms provided by reputable P2P platforms

Cons:

• Origination fees may apply, typically 1% to 8% of the loan amount
• Strict repayment terms with little flexibility for renegotiation
• Not all platforms are available in every state

HELOC or home equity loan

If you're a homeowner with sufficient equity in the property, a home equity line of credit (HELOC) or a home equity loan can help you tap into your home wealth to cover bills.

A HELOC works like a credit card with a revolving credit line you can borrow from as needed. You'll make interest-only payments during the draw period, then principal-plus-interest payments during the repayment period. HELOCs carry variable interest rates, meaning your monthly obligations may fluctuate. 

With a home equity loan, you get a lump sum in exchange for fixed monthly payments. Both equity tools allow you to use funds any way you need—bills, debt consolidation, or even refinancing student loans.

HELOCs can be particularly useful if you need ongoing access to cash, while home equity loans are better for one-time large expenses.

To qualify, you’ll need a credit score above 620, sufficient equity, and stable income. 

Pros:

• Lower interest rates compared to unsecured loans
• Potential tax-deductible interest (consult a tax advisor)
• Large borrowing limits depending on your home's equity

Cons:

• Has closing costs and fees
• Longer approval process
• Your home is at risk if you default

Cash-out refinance

A cash-out refinance is another financial tool that can help you tap into your equity. Refinancing replaces your current mortgage with a new, larger loan, giving you a lump sum in exchange. Since you're replacing your mortgage, you'll receive a new rate and terms. Repayment is rolled into the new mortgage, keeping payments streamlined. 

Cash-out refinancing can be particularly useful if you need a one-time large sum and are in a strong position to get a more favorable rate and terms. 

To qualify, you'll need a credit score above 620, sufficient equity, and stable income.

Pros:

• Potential to improve mortgage terms
• Can reduce your overall interest costs
• Consolidates cost into one streamlined payment

Cons:

• Increases your total mortgage debt and repayment period
• High closing costs and fees
• Risk of foreclosure should you default

401(k) loan

While borrowing from your retirement savings can be risky, it might be a viable solution for immediate financial relief—mainly if you're confident you'll be able to make future catch-up contributions.

With a 401(k) loan, you can borrow up to  50% of your vested account balance or $50,000 (whichever is less) without incurring an early withdrawal penalty. The loan plus interest is then repaid to the account through standard payroll deductions over a 5-year term.

Consider a 401(k) loan only if other borrowing options are too expensive or inaccessible—and be sure to consult a financial advisor before you do.

Pros:

• No credit check required
• Interest is paid back into your retirement account
• Competitive interest rates

Cons:

• Missed growth opportunities on borrowed funds
• Potential tax penalties if not repaid on time
• The entire loan will become due if you leave or lose your job

Loan alternatives to pay your bills

If a loan will put you into further financial distress, consider alternatives. 

Home equity investment (HEI)

A home equity investment (HEI) is another way to tap into your equity in exchange for cash—to pay down bills, debt, or whatever you need. You get a lump sum in exchange for a share of the home's future appreciation—which means no monthly payments. Instead, you pay back the investment anytime during a flexible 30-year term when you sell, refinance, or use another source of funds.

HEIs are a great alternative to home equity loans and HELOCs because they have more flexible requirements and no monthly payments.

To qualify, you'll need sufficient equity and a credit score above 500. There are no income requirements. You can prequalify with no commitment to continue your application. 

Pros:

• No monthly payments over a 30-year term
• Up to $500K
• Assumable by heirs

Cons:

• Has closing costs and fees
• Must settle the investment with a single-balloon payment
• Risk of foreclosure should you default 

Government grants and assistance programs

Depending on your circumstances and needs, you can qualify for government grants or assistance programs that don’t require repayment. These programs can help with utility bills, rent, and other essential expenses.

Individuals can call 211 or visit the website to speak to their local 211 agency for assistance.

Other programs include:

• Low-Income Home Energy Assistance Program (LIHEAP): Helps low-income households with energy costs.
• Temporary Assistance for Needy Families (TANF): Provides cash assistance for basic needs.
• Emergency Rental Assistance Program (ERAP): Offers financial aid for rent and utility payments.

Pros:

• Funds don’t need to be repaid
• Designed to assist with essential expenses

Cons:

• Strict eligibility requirements
• Application and approval processes can take time

Cash advance

You can borrow money against your credit card’s available balance with a cash advance. It can provide quick borrowing without having to apply for a new debt product. However, cash advances typically come with higher fees and interest rates than regular credit card purchases, so tread cautiously.

Consider a cash advance only when you need immediate access to funds for essential bills—and have a plan to repay the amount quickly.

Pros:

• Fast access to cash, often available at ATMs or through your credit card issuer
• No application process separate from your existing credit card
• No collateral required

Cons:

• High interest rates, often starting immediately without a grace period
• Cash advance fees, usually a percentage of the amount withdrawn
• Can quickly lead to debt if not repaid promptly

401(k) hardship withdrawal

A 401(k) hardship withdrawal allows you to take money from your nest egg to cover immediate and heavy financial needs. Unlike a 401(k) loan, the withdrawal doesn't have to be paid back— however, that creates a significant risk to your golden years.

A 401(k) hardship withdrawal should be considered a last resort due to its impact on your long-term security. However, if you're facing severe financial challenges and other options are unavailable, it's worth consulting a financial advisor.

Pros:

• Not based on credit or income
• No need to repay the withdrawn amount
• May avoid loan interest payments

Cons:

• Subject to income tax and, if under age 59½, a 10% early withdrawal penalty (unless exceptions apply)
• Reduces retirement savings and potential growth
• Strict eligibility requirements based on IRS guidelines

Frequently asked questions

What is the easiest loan to get immediately?

The easiest loan to get immediately is typically a payday alternative loan (PAL) from a credit union. PALs are designed to get you access to cash quickly and with fewer barriers than traditional loans. If you're not a credit union member, a personal loan from online lenders is also competitive. Online personal loans can also offer fast approval and funding, sometimes within a day, especially if you have a good credit score.

What do I need to apply for a loan?

To apply for a loan, you typically need proof of identity (such as a driver's license), proof of income (pay stubs, tax returns, or bank statements), and proof of residence. Lenders also evaluate your credit score, debt-to-income ratio, and employment history to gauge your ability to repay the loan. Secured loans will also require proof of value in your collateral. For example, home equity loan and HELOC lenders will use an appraisal to verify the property's value. 

Where can I get a loan to pay my bills?

Traditional lenders like banks and credit unions offer personal loans. However, online lenders can often provide faster approval. If you own a home, you can explore home equity loans or HELOCs through mortgage lenders. For a 401(k) loan, you'll have to contact your plan provider. When exploring your options, be sure to shop and explore multiple lenders. This will allow you to compare rates and terms to find the best solution for your needs. 

Tips for qualifying for a loan

For most financial tools, you’ll need to complete an application and undergo an underwriting process to qualify. 

Most lenders will look at the following criteria: 

• Credit score
• Income
• Debt-to-income ratio (meaning, how much of your current income is already being used to pay down debt)

To improve your chances of qualifying, you can do the following: 

• Raise your income with a side-hustle or second job – While not always realistic, this will raise your income and lower your DTI, improving your profile as a borrower even if your credit is not ideal.  
• Making more than your minimum payments on existing loans – Paying down existing loans will raise your credit score and lower your DTI. 
• Apply with a cosigner – If your own credit and income are an issue, applying with a trusted cosigner can help reduce risk for the lender and raise your chances of qualifying. Keep in mind that defaulting on a loan when you have a cosigner will affect their credit score, which can cause issues for your relationship with the friend, family member, or loved one who is helping you out. 

If qualifying for a traditional financial tool is a challenge, consider an alternative option like an HEI from Point. 

Final thoughts

Loans can help you meet your bills, but the relief is temporary—they come with the responsibility of repayment and interest, which only straps more of your cash flow. 

Before deciding, assess your financial situation, compare loan terms, and consider how repayment will impact your future finances. With careful planning, you can find a solution that will allow you to catch up on bills while taking steps toward better financial stability.

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