Grace Enfield, Content Writer
@grace_enfield
A hardship loan is a loan you take out in a time of serious financial need or to cover an unexpected shortfall, such as when you lose your job or get hit with medical bills. Some options to consider when you need a hardship loan include 401(k) loans, personal loans, home equity loans, and loans from friends or family.
Types of Hardship Loans to Consider in 2025
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401(k) loans
You can take money out of your retirement savings with a 401(k) loan, but you need to repay what you borrowed, plus interest, within 5 years of borrowing it. If you don’t repay it in this time, there will be taxes and penalties, in most cases.
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401(k) withdrawals
You may be able to withdraw funds from your 401(k) as long as it is for an immediate, important financial need. But you can’t take out more than necessary to satisfy the need, and you cannot repay what you took out. You may also be subject to an additional 10% tax on early distributions.
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Personal loans
Personal loans can give you fast funds if you’re in an emergency. In general, you can get up to $100,000 in funding with APRs of 4% - 36% and repayment periods of 12 - 60 months.
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Home equity loans
Home equity loans can be used for almost anything, as long as you’re willing to use your home as collateral. If you choose to get a home equity loan, you may receive a decision within 7 business days and then receive your funds within 1 to 10 business days of approval.
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Loans from local government
Local governments offer disaster or hardship loans, which can help you pay rent for your apartment or keep your small business’s doors open. You need to meet the requirements to get a loan from your local government, but they vary from area to area.
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Loans from friends or family members
Getting a loan from a friend or family member may be a good option for you. You may find that a loan from someone you trust will have better terms than a conventional loan.
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Paycheck advance services
Services like Dave and Earnin give you a small amount of money before your next paycheck. Once you get your paycheck, you will need to repay the advance, without interest.
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Payday loans
Payday loans offer up to a few hundred dollars in funding. They are also very short-lived and have fees equivalent to an APR of 400%+. They should be avoided.
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