There are lenders who will approve loans for applicants with poor credit, but be warned that interest rates and fees can be exceedingly high. These nine lending options are the best for flexible terms, quick approvals, and modest rates and fees.
When you apply for a loan, lenders look at your credit score and credit history to determine the risk associated with loaning you the money.
So what happens when your credit score is on the low end, or when you don’t have any credit history at all? Does that mean you’ll never get a loan?
Thankfully, there are some lenders who will approve loans for applicants with poor credit, even when most others won’t. But be warned: their interest rates and fees can be astronomically high. If you have bad credit but need to take out a personal loan, be prepared to pay higher rates and fees — it’s simply an unfortunate reality in the world of credit scores.
Our advice: stick to a short loan term so you don’t end up paying hundreds (or thousands!) in interest.
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- High APRs for applicants with fair or low credit
Let’s take a look at the best loans for bad credit, so you can navigate this challenging situation.
Best Personal Loans for Bad Credit
- Best for quick applications: Fiona
- Best for low credit borrowers: OppLoans
- Best for flexible terms: OneMain
- Best for people without credit history: Upstart
- Best for fast payout of loan funds: Avant
- Best for quick approvals: LendingPoint
- Best for online experience: LendingClub
- Best for high debt-to-income ratio: Prosper
Best for Quick Applications: Fiona
- APR: Varies by lender
- Loan terms: 6 to 144 months.
Fiona is an aggregator that offers free quotes for personal loans with an application that takes less than 60 seconds to complete and does not require a hard credit pull.
- Fast quote process
- Reputable companies
- Free to use
- Helpful education tools
- No hard credit pull
- Limited quote options
- Not a direct lender
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.
Best for Low Credit Borrowers: OppLoans
- APR: up to 160%
- Loan terms: 9 to 36 months.
OppLoans offers loans to those with bad credit. Although their APRs are still very high, they aren't as bad as traditional payday or title loans, and they typically offer longer loan terms.
- Easy to apply
- Build Credit History
- Quick Funding
- Very high interest rates
- Loan terms and availability differ greatly between states
OppLoans has no minimum credit score requirement. Instead, they take a variety of factors into account, including 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.
Best for Flexible Terms: OneMain
- APR: 18.00% to 35.99%
- Loan terms: 24, 36, 48, or 60 months.
OneMain Financial has been helping people get through financial challenges for over 100 years, even if their credit scores are less than desirable. OneMain Financial makes it a point to look past your score, get to know your individual needs, and find you a personal loan that is right for your budget.
- No early payment fees
- Flexible term lengths
- Applying online is quick and easy
- Origination fees
- High APR range
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!
Best for People Without Credit History: Upstart
- APR: 4.60% to 35.99%
- Loan terms: 3 or 5 year terms
Upstart is a peer-to-peer (P2P) lending model that matches borrowers with lenders to cut through the red tape of traditional banking procedures. Upstart provides personal loans for just about any purpose, while focusing primarily on the recent college graduate market.
- May be offered for borrowers with new credit
- Strong company reputation
- Not for poor or average credit
- High origination fee
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.
Best for Fast Payout of Loan Funds: Avant
- APR: 9.95% to 35.99%
- Loan terms: 24 to 60 months.
Avant promotes itself as an alternative to the extensive application process banks often require for borrowers. They have a quick online application and make an effort to disburse funds as soon as possible. Avant aims to serve clients in the middle of the credit score spectrum – those having trouble getting loans elsewhere.
- Fast disbursement of funds
- Accessibility for a range of borrowers
- Credit building
- High interest rates
- No co-signer option
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.
Best for Quick Approval: LendingPoint
- APR: 7.99% to 35.99%
- Loan terms: 24-72 months.
LendingPoint can help even bad credit borrowers in need of cash find the funding needed as quickly as possible. Although the APR will be fairly high for most bad credit borrowers, you’ll get the funds you need the next business day after approval. This can help you cover your expenses as quickly as possible.
- Quick funding
- No prepayment penalties or charge for extra payments
- Origination fee up to 8%
- High maximum APR
LendingPoint offers loans between $2,000 and $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.
Learn more about LendingPoint.
Best for Online Experience: LendingClub
- APR: 8.05% to 35.89%
- Loan terms: 36 months or 60 months.
LendingClub charges no prepayment penalty, offers a nice range of loan amounts, and offers a 15-day grace period for missed payments. Best of all, the minimum credit score to apply is just 600.
With above average rates and high origination fees, LendingClub is best for borrowers with fair credit who may otherwise have limited borrowing options.
- No prepayment penalty
- Range of loan amounts
- 15-day grace period on missed payments
- Restrictive loan terms
- Higher rates than some competitors
- Steep origination fee on loans
LendingClub originally was a peer-to-peer lending platform where you’ll be lent money from real investors, rather than a giant corporation. They now fund personal loans with customized loan options provided in minutes.
Best for High Debt-to-Income Ratio (50%): Prosper
- APR: 6.95% to 35.99%
- Loan terms: 3 or 5 years.
Prosper is a peer-to-peer lending platform. Borrowers can find competitive rates for personal loans with two to five-year terms. Behind the scenes, loans are funded by investors, not Prosper itself. Prosper offers loan rates instantly without affecting your credit score.
- Instant rate check with no impact to credit
- Peer-to-peer funding eliminates banks
- Borrow up to $50,000
- No prepayment penalty
- Origination fee
- Some borrowers get a high APR
The Prosper application process 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 when applying for a personal loan online. 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
The annual percentage rate, or APR, is the interest charged on your loan each year, expressed as a percentage of the loan balance. going to make up a chunk of your loan, so you want to ensure you’re getting the best interest rate you can qualify for.
Do your homework 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.
Loan Terms
Before you take out any loan, make sure you understand the loan terms. That includes how long you have to repay the loan and whether the interest rate is fixed or variable. If the interest rate is variable, it could go up at any time, which would make your loan more expensive.
It’s also important to be sure you can pay off the loan early without penalty. Otherwise, you might end up paying more than you need to.
Fund Disbursement
When you’re in need of extra cash, the last thing you want is to have to wait around for days or even weeks to receive your funds.
Take a few minutes to research fund disbursement timelines before you apply. Most personal loans are processed and funded within a few days, but some lenders may take longer.
If you’re facing a financial emergency, be sure to check with the lender to see how quickly they can get the funds to you.
Fees
Most personal loans will have an origination fee, which is a fee charged by the lender for processing the loan. There may also be a credit check fee, which is a fee charged by the lender for pulling your credit report.
If you decide to pay off your personal loan early, there may also be an early payoff fee.
And, of course, personal loans usually have late fees if you miss a payment — which can be avoided by making your payments on time.
Reputation
You’re going to want to look up the lender to see what kind of reviews they have from real customers.
A quick Google search should show you customer reviews and ratings. You can also check out sites like the Better Business Bureau to see if there have been any complaints filed against a company.
Customer Service
You’ll want to make sure you’re working with a company that has solid customer service, in case you have any questions or need help with the loan process.
Before you commit, give them a call or send an email to see how responsive they are. This should give you a good idea of whether or not they’re a good fit for you.
Ease of Application
Application processes can vary depending on the lender, but most will require you to fill out an online application and provide some basic information about yourself and your finances. You may also be required to submit additional documentation, such as bank statements or pay stubs.
While you don’t want a lender to make you jump through hoops to get approved, you should steer clear of lenders who don’t require any sort of due diligence.
Types of Loans for Bad Credit
Not all loans are created equal. When looking for the best personal loan for you, you’re going to want to consider all your options to find what best suits your circumstances.
Here are the different types of loans you’ll see available for bad credit:
Secured Loans
A secured loan is any loan that’s backed by some sort of collateral on your end. This could be anything from your home to any other financial asset that you own.
This is one of the best loans for bad credit because you can land a lower interest rate since you’re putting something up to help mitigate the risk for the lender.
The potential pitfall is that you can lose the asset that you put up as collateral for the loan if you can’t pay the loan back. A repossession will stay on your record for seven years.
Unsecured Loans
An unsecured loan isn’t backed by any collateral. As a result of this, the financial institution will charge you more in interest since they have more to lose if you default on your loan.
Unsecured loans are extremely hard to get if you have bad credit and, if you do, the biggest pitfall is that you’re going to be charged a higher interest rate since you’re considered high risk.
Payday Loans
A payday loan is a very short-term loan — we’re talking no more than a few weeks short.
And while they might seem like a great idea at first glance, since they typically come with smaller loan amounts, shorter terms, and very fast approvals, be wary. That’s because their APRs are ridiculously high. And if you can’t pay by the end of the term, expect to pay extra charges and fees.
Cash Advances
While you could take a cash advance on your credit card, you probably shouldn’t.
That’s because cash advances typically come with higher interest rates than regular purchases on your card, and there’s usually no grace period — meaning interest will start accruing immediately.
Not only that, but they also tend to come with a fee, like 5%, that you pay upfront.
However, there are several cash advance apps out there that let you advance small amounts (typically $100 to your full paycheck). Again, though, just be aware of high fees and high APRs.
Home Equity Loans
A home equity loan allows you to borrow a lump sum of cash against the equity that you have in your home (i.e., the value of your home minus your mortgage). You typically pay this back with fixed payments on an agreed-upon schedule.
A home equity loan is a better option than most other bad credit loans since you’re likely to pay a lower interest rate and you can get access to more money than a typical personal loan for bad credit.
The biggest pitfall of a home equity loan, of course, is that you’re using your home as collateral. So if you can’t repay, your home is on the line.
You also may have to pay a closing fee (ranging from 2-5% of the amount) since a home equity loan is considered a real estate transaction.
Credit cards
Credit cards aren’t loans per se, they’re lines of credit. The difference is that you can borrow from a line of credit, pay some of it back, and then borrow again. This is known as “revolving”. With a loan, you only borrow money once and then pay it off over time. Although credit cards are difficult to obtain for people with bad credit, there are a few credit cards for bad credit that are worth researching.
Lending Sources for People with Bad Credit
Our list of best loans for bad credit include a mix of the following sources?
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.
Personal Loan Lenders
These 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.
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.
Loans for Bad Credit: FAQ
What are the average loan rates for a loan with 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.
Are there any bad credit loans with guaranteed approval?
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.
Will taking a loan with bad credit affect my credit score?
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 inquiries within six 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.
Can you get a loan with no credit check?
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.
What credit score is considered poor?
A good credit score typically starts at 670 on the FICO scale.
A credit score below 580 is considered a bad credit score and lenders will be hesitant about loaning money to someone with poor credit.
What makes your credit score poor?
Poor credit scores are often the consequences of late/missed payments, high credit usage (maxed-out credit cards), and too many credit applications. You’re going to want to focus on paying down debt and making your payments on time to improve your credit score.
How do you spot a bad credit loan scam?
There are three things to look out for when it comes to bad credit loan scams:
- The lender guarantees approval.
- The lender isn’t transparent about fees.
- It sounds too good to be true.
Summary
Getting a personal 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.