Some lenders will approve loans for applicants with poor credit when most others won't, but interest rates and fees can be high. Be prepared to stick to a short loan term so you don't have to pay hundreds in interest.

If you have poor credit but need to take out a personal loan, be prepared to pay higher interest rates and fees. It’s simply an unfortunate reality in the world of credit scores.

Think carefully about the total cost of the loan – and your ability to repay it – before signing.

Best loans for bad credit overview

LenderBest forAPRTerm
MonevoLarge loan options and terms2.49% - 35.99% APR12 months to 144 months
FionaQuick applicationVaries by lender6 to 144 months
OppLoansLow credit borrowers59% to 199%9 to 36 months
OneMainTried and true lending process18.00% to 35.99%24, 36, 48, or 60 months
UpstartFlexible terms6.18% to 35.99%36 to 60 months
AvantFast payout of loan funds9.95% to 35.99%24 to 60 months
LendingPointFast application and payout9.99% to 35.99%24 to 60 months
LendingClubPeer-to-peer borrowing8.05% to 35.89%36 months or 60 months
ProsperHigh debt-to-income ratio (50%)6.95% to 35.99%3 or 5 years

The best lending sources for people with bad credit

Loan aggregators

Loan aggregators are an excellent source of financing when you have bad credit because they can show you lenders that are most likely to approve your application. Loan aggregators aren’t direct lenders; they are in partnership with loan providers that will get you your loan.

Since aggregators serve all credit levels, you may be able to get matched with a loan using a loan aggregator even with poor credit. To apply for a loan through a loan aggregator, you’ll need to fill out a loan request, and then lenders will go ahead and make offers depending on the borrower’s credit profile.

  • Monevo is a great option when it comes to loan aggregators. Monevo lets you compare up to 30 lenders with one application in a matter of seconds. Loan amounts range from $500 all the way to $100,000 and interest rates between 2.49% - 35.99% APR. Monevo does run a check on your credit score, but some of its lenders will accept credit scores as low as 450. Read more about Monevo in our review.
  • Fiona is another very popular aggregator. With Fiona, you complete a single loan request and have access to dozens of offers from different lenders, all organized in one easy-to-read list. Your credit score won’t be affected until you choose a lender and complete their full application. Read more about Fiona in our review.

Personal loan lenders

The following are direct-to-consumer lenders that offer products specifically designed for bad credit. Interest rates can get exceedingly high, so these are best used only in true emergencies when you have a plan to repay the debt quickly.

  • OppLoans has no minimum credit score requirement, instead, they take a variety of factors into account. That includes bank data and information from alternate credit bureaus. Best of all, OppLoans reports your payment history to the three main credit bureaus to help you increase your score.
  • OneMain offers loans between $1,500 to $20,000, and you can check your offers with no effect on your credit score. The process is slightly rigorous, but OneMain has been in business for more than 100 years, so it’s safe to say they know what they’re doing. After filling out your application, you’ll meet with a loan specialist at a local branch where you’ll verify your identity, income, expenses, and employment. From there, you’ll sign some paperwork and get access to your money!
  • Upstart specializes in students and recent graduates who are still working on building a credit history. You can apply for loans from $1,000 to $50,000 for everything from school expenses to vacations. Instead of a credit score, Upstart uses artificial intelligence to approve loan applications, giving the company an approval rate 27% higher than traditional methods.
  • Avant offers personal loans ranging from $2,000 to $35,000, with interest rates ranging from 9.95% to 35.99% depending on your credit score. The lender features an easy online application process, along with a clear and transparent process and fast funding. If your application is approved, you could receive funds in as little as one business day.
  • LendingPoint offers loans between $2,000 – $36,500 and you can get your funds by the next business day once you’re approved. You can check your rates (with no impact on your credit score) in minutes. And LendingPoint is quick – once you are approved, you may have access to your funds as soon as the next business day.

Peer-to-peer (P2P) lenders

Peer-to-peer lenders make loans using funds collected from thousands of individual investors. Some bad credit options are available — loans are approved on a case-by-case basis — but interest rates can be as high as 36%. You can use these loans for any purpose: debt consolidation, starting a business, or even purchasing a car.

  • LendingClub Bank offers a peer-to-peer lending platform where you’ll be lent money from real investors, rather than a giant corporation. You can check your rates in a matter of minutes with no effect on your credit score. They say on their site that the average APR on their personal loans is 15.95% – so not so terrible, especially when compared to high interest credit cards. 
  • Prosper focuses on personal loans. Their application takes just a few minutes, and you can get approved for loans up to $40,000. Prosper offers a number of term lengths ranging from three to five years, so you can pick the one that fits your budget. Plus, all your payments are at a fixed interest rate, so you don’t have to worry about your payment terms suddenly changing.

What to look for in a lender

It’s important to read loan terms carefully and understand all the potential costs of a loan. These can include fees above and beyond the interest rate (APR). This is especially true of loans for consumers with bad credit.

Factors to consider include:

  • APR. This is going to make up a chunk of your loan, so you want to make sure you’re getting the best interest rate you can qualify for. Do your homework – really – and check around for your best rate options. With poor credit, your choices are more limited, but you still have choices and shouldn’t settle for the first lender that says yes. Even a small difference in APR can add up to hundreds or thousands of dollars in additional interest payments over many years.
  • Your loan terms. How long do you have to repay the loan? Make sure you are able to pay off the loan early without penalty. Is the interest rate fixed or variable (meaning it could go up at any time)?
  • Fees. These can include origination fees, credit check fees and early payoff fees. Late fees are standard but can be avoided with timely payments.

How to increase your chance of getting approved for a loan with bad credit

  • Understand your credit score. Before you take out a loan, know your credit score and own it. Like it or not, your score will determine a lot about your loan rates and terms.
  • Know how much you can pay each month. Never take out a loan that you don’t think you’ll be able to pay back in a timely manner. Doing so will result in excessive fees and interest, further damage to your credit, and a much more difficult financial situation to get out of.
  • Check your loan rates.
  • Gather your documents. When you apply for a loan there are certain documents you’ll be required to provide, depending on the type of loan you’re looking for. These include things like your W-2(s), evidence of Social Security or pension income, copies of completed tax returns, make, model and value of your car, and much more. Always check with your specific lender before beginning the full application process.
  • Determine if you need a cosigner. If you have bad credit, having a cosigner can dramatically increase your chances of approval. A cosigner is someone who has a higher credit score and is willing to take on the financial burden of the loan in the event that you can’t make the payments.
  • Complete the application. Most of the time, a loan application will take you about 20-30 minutes. Reviewing your application can take several business days, but some lenders offer overnight or even same-day approval. Funds are typically distributed to your bank account within two days of approval.
Experian Boost Disclaimer - Results may vary. Some may not see improved scores or approval odds. Not all lenders use Experian credit files, and not all lenders use scores impacted by Experian Boost.

FAQs about loans for poor credit

Borrowers with bad credit can expect average personal loan rates around 30% and, sometimes, even higher. This is compared to rates between 4% and 20% for borrowers with good credit.
Beware of lenders promising "guaranteed approval". While a lender may guarantee loan approval (even for borrowers with bad credit), this is likely because they will require the loan to be secured with collateral (something like the title of your car) or your paycheck (e.g., a payday loan). These loans are extremely dangerous because they put your property -- or even your income -- at risk in the event you miss a single loan payment.
Yes. Although shopping for loan rates may not affect your credit score, applying for a loan will count as an inquiry on your credit report. If you have more than two inquires within 6 months this may cause your credit score to drop. If you are approved for the loan, your credit score may drop further when the loan is added to your credit report, but your score may actually improve after several months of timely payments.
Sometimes, but don't count on it. While most lenders will still check your score, some lenders now use artificial intelligence to analyze your bank account and employment history to make a lending decision. They may not check your credit score, but they are still investigating your financial history.

Summary

Getting a loan with bad credit is difficult, but not impossible. Be prepared to pay relatively steep interest rates and fees. Only borrow what you absolutely must and make a plan to repay the loan as soon as possible.

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About the author

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Since 2009, Kevin Mercadante has been sharing his journey from a washed-up mortgage loan officer emerging from the Financial Meltdown as a contract/self-employed “slash worker” – accountant/blogger/freelance web content writer – on Out of Your Rut.com. He offers career strategies, from dealing with under-employment to transitioning into self-employment, and provides “Alt-retirement strategies” for the vast majority who won’t retire to the beach as millionaires. He also frequently discusses the big-picture trends that are putting the squeeze on the bottom 90%, offering work-arounds and expense cutting tips to help readers carve out more money to save in their budgets – a.k.a., breaking the “savings barrier” and transitioning from debtor to saver. He’s a regular contributor/staff writer for as many as a dozen financial blogs and websites, including Money Under 30, Investor Junkie and The Dough Roller.