Loans for Utility Bills: Help When you Can’t Pay

Low-income households pay as much as 20% of their income on utility bills, and 44% of households struggle to keep up with these bills. If this sounds like you, know that you aren’t alone. With the fast increase in the cost of living, households struggle to pay common bills like gas or electricity bills.

Unfortunately, having adequate funds to pay the utility bills is essential, or you could risk the utility company shutting them off. Most states require utility companies to provide warning before shutting utilities off, but it could be as short as 24 – 48 hours’ notice, requiring you to find same-day funding to avoid this risk.

Fortunately, there are several loan options to avoid unpaid utility bills. Here’s everything you need to know about your options to keep your home’s lights, heat, and water on.

The Consequences of Not Paying Utility Bills

The ultimate consequence of not paying utility bills is losing access to essential things like power, gas, and phone or internet service.

Fortunately, most companies provide warnings and opportunities to catch up on your bills; they don’t immediately initiate a disconnection. In addition, each state has requirements regarding disconnections that companies must follow.

However, the downside is if you don’t pay the amount due on time, you’ll incur late fees, which increases your total bill and the amount to avoid disconnection. Some utility companies even require a deposit if your payment history isn’t good.

The key is to contact the utility provider as soon as you know you cannot afford the bill. Many companies offer residential customers energy assistance support. To qualify, you must demonstrate a financial hardship. If you ignore the energy bills and your difficulty paying them, you could risk losing access to important utilities in your home.

Loans for Utility Bills

Borrowing money to pay your energy provider may not feel like you’re getting ahead, but it keeps you and your family safe. If you’re struggling financially, utility assistance, like loans, can keep your lights on and make your home comfortable while you figure out your financial future.

The key to using financing to pay for utility bills only in an emergency. Common examples include job loss, a sudden illness, or unexpected expenses that hurt your budget.

Here are some common ways to finance your utilities when you can’t afford the payments:

Emergency Car Title Loans

If you’ve received a disconnection notice for your utilities, you likely need funds fast, often the same day, to prevent loss of power, gas, or water. Most loans take at least a few days, and sometimes a few weeks to process, leaving you without home energy in the meantime.

Emergency car title loans may provide same-day funds if you apply and are approved before the lender’s cutoff (usually early afternoon local time).

Eligibility for a car title loan includes:

• You must own a car with your name on the title
• The car shouldn’t have any liens (car loans)
• You must prove you have adequate income to meet the repayment terms

You don’t need a job or perfect credit to qualify for a title loan. The lender uses the car as collateral. You risk losing the car if you don’t repay the loan as agreed. If you make your payments on time, the funds can help you get caught up on your utility bills while allowing you to keep your car.

Personal Loans

Most lenders require good credit for unsecured personal loans, but there are a few options for borrowers with bad credit to get funding. The downside is personal loans usually take at least a few weeks to get approved and funded, time which you may not have.

Common Personal Loan Options Include:

• Secured loan: Requires collateral and has loan terms of two to seven years
• Co-signed loan: A relative with good credit may be on the loan application
• Payday loans: Offers same-day funds, but requires repayment on the next payday

Payday Alternative Loans

Payday Alternative Loans (PALs) are loans credit unions provide as an alternative to payday loans. You must have been a credit union member for at least one month to be eligible. The credit union can only charge loan application fees ($20 max), and the amount borrowed can range from $200 to $1,000. Most credit unions require repayment in one to six months.

401k Loans

Some 401K plans allow you to borrow against retirement funds without checking your credit. Even though you own the funds, you must repay the amount borrowed with interest. Most plans allow you up to five years to repay the amount borrowed, and the interest goes back into your account.

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Other Utility Bill Assistance Programs

Depending on your location, local resources may be available to help with your utility bills. Every program has different qualifying criteria and requirements, so read the fine print to see if you qualify.

The Low-Income Housing Federal Assistance Program (LIHEAP) helps with heating and cooling bills. The federally funded assistance offers an eligibility tool to help you determine if this is an option when unable to pay your heating or cooling bills. Some services they offer include disconnection prevention, reconnecting services, and repair or replacement of heating/cooling equipment.

Charitable Organizations and Church Support

Other local agencies may also provide financial support to pay utility providers, including the following:

• HUD: Each state HUD department offers different support services
• Local churches: Many churches offer utility assistance programs
• Salvation Army: Local branches offer support in certain communities
• Catholic Charities: Local branches offer many types of financial support

Ways to Avoid Turned-Off Utilities

Dealing with disconnected utilities can be frightening, as it can risk the health and welllness of you and your family members. Fortunately, there are ways to avoid disconnection, including loans for utility bills.

Contact Utility Companies

When you can’t afford your utility bill, don’t ignore the situation. It only gets worse. Instead, contact your provider and let them know the financial struggles you’re experiencing. Depending on the provider and how late you are on your bills, they may offer a few options, including:

• Payment plan: If you can afford a payment plan, the provider may spread out your past-due payments over a few months or longer.
• Change your due date: If your due date doesn’t coincide with your paydays, ask to change it to avoid late fees and disconnection.
• Budget plan: Some utility providers have a budget plan that sets a fixed monthly payment no matter your usage to avoid high bills during high usage.

Decrease Utility Usage

Decreasing your utility usage is one of the best ways to avoid turned-off utilities. Here are a few ideas to decrease usage:

• Change air filters as often as the manufacturer suggests
• Have the HVAC system cleaned and maintained regularly
• Fix faucet or plumbing leaks to avoid excess water usage
• Limit shower usage or duration of showers
• Unplug appliances and chargers that aren’t in use
• Use a programmable thermostat to control HVAC use
• Close vents in rooms that no one uses regularly

Revisit your Budget

If you consistently cannot afford your utility bills and have used your utility company’s option to change your due date or set up a budget plan, check your budget. You may be overspending in areas where you can cut back and put the money toward your utility bills.

If you need help handling your budget or don’t know how to overcome your financial struggles, consider contacting the National Foundation for Credit Counseling for resources to get back on track.

Bottom Line: Same-Day Loans for Utility Bills

Sometimes, life throws you curveballs, and same-day loans for utility bills become necessary. The key is understanding the eligibility requirements and how the loan affects your long-term finances. Many options provide short-term relief, but not all have the same repayment requirements. Look closely at the interest rate and fees to determine which financing option is best for you.

Car title loans are one way to help with your financial struggles. You can apply online in a few minutes and receive a no-obligation quote. This helps you see what it would cost to get same-day funds and prevent disconnection of your utility service.