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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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.
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.
Understanding Bad Credit Loans
Bad credit loans are designed to help those who have experienced difficulty with their credit score or have a restricted credit history. It is a type of personal loan specifically catered for people in this situation. These loans are typically offered by lenders who specialize in working with borrowers who may not qualify for traditional loans due to their low credit scores.
Bad credit loans can be used for a variety of purposes, including debt consolidation, home improvements, or emergency expenses. The main difference between traditional loans and bad credit loans is that the latter typically have higher interest rates and fees. This is because lenders view borrowers with poor credit as higher-risk, so they charge higher rates to offset the potential for default.
Comparison of multiple lenders and loan options is vital when considering a bad credit loan to find the best fit for your needs. This may include evaluating interest rates, loan terms, and fees associated with each loan offer. Additionally, it’s important to understand the potential impact of a bad credit loan on your credit score and overall financial situation.
In summary, bad credit loans provide an option for individuals with less-than-perfect credit to access funding when they may not qualify for traditional loans. By understanding how these loans work and comparing lenders and loan options, you can find the best solution for your unique financial needs.
Factors Affecting Your Credit Score
Your credit score plays a significant role in determining your eligibility for loans, interest rates, and other financial products. Several factors can affect your credit score, including:
- Your payment history
- Amounts owed
- Length of credit history
- Credit mix
- New credit applications
Payment history is the most critical factor, accounting for 35% of your credit score. Late or missed payments can significantly harm your credit score, while consistently making on-time payments can help maintain or improve your score. Amounts owed, or credit utilization, refers to the percentage of your available credit that you’re currently using. High credit utilization can negatively impact your score, while low utilization can help boost your score.
Length of credit history, which accounts for 15% of your credit score, refers to the age of your credit accounts. A longer credit history generally contributes to a higher score, as it demonstrates responsible credit management over time. Credit mix, or the diversity of your credit accounts (e.g., credit cards, mortgages, auto loans), accounts for 10% of your score. A diverse credit mix can positively impact your score. New credit applications, which make up the remaining 10% of your credit score, can temporarily lower your score due to the hard inquiries that result from applying for new credit.
Understanding these factors and how they affect your credit score can help you maintain or improve your score, increasing your chances of securing loans and other financial products in the future.
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:
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.
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.
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.
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.
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.
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.
Qualifying for a Bad Credit Loan
Qualifying for a bad credit loan generally requires meeting specific eligibility criteria set by the lender. These criteria may include a minimum credit score, stable employment, and a verifiable bank account. Some lenders may also consider other factors, such as your income and employment history, when determining your eligibility for a loan with a bad credit score.
Comparing multiple lenders and their requirements could increase your chances of qualifying for a bad credit loan. This can help you find a lender that is more likely to approve your loan application, even if you have a low credit score. Additionally, some lenders may offer prequalification, which allows you to check potential loan options without impacting your credit score.
When applying for a bad credit loan, be prepared to provide documentation, such as proof of income, employment, and a valid government-issued ID, to verify your identity and financial situation. Review the loan terms and conditions carefully before accepting any offer, and consider the potential impact of the loan on your credit score and overall financial situation.
In summary, qualifying for a bad credit loan requires meeting specific eligibility criteria set by lenders. By comparing multiple lenders, understanding their requirements, and being prepared to provide necessary documentation, you can increase your chances of securing a bad credit loan.
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:
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.
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.
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.
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 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.
Comparing Loans for Bad Credit
Evaluating various factors is crucial when comparing loans for bad credit to find the best loan for your unique financial situation. Some of these factors include interest rates, repayment terms, and fees associated with each loan offer.
Interest rates on bad credit loans are typically higher than those on traditional loans, as lenders view borrowers with poor credit as higher-risk. However, comparing multiple lenders can help you identify the most competitive rates and fees available for your specific credit situation. In addition, it’s crucial to consider the repayment terms of each loan offer, as this will determine the overall cost and affordability of your loan.
Another vital aspect to consider when comparing loans for bad credit is the funding time. Some lenders may offer expedited funding, providing access to the loan proceeds as soon as the following business day. This can be particularly important if you need funds quickly for emergency expenses or other financial needs.
In conclusion, comparing loans for bad credit involves evaluating:
- Interest rates
- Repayment terms
- Funding times
By carefully considering these factors and comparing multiple lenders, you can find the best loan for your unique financial needs.
Lending Sources for People with Bad Credit
Our list of best loans for bad credit include a mix of the following sources?
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.
Applying for a Bad Credit Loan
The process of applying for a bad credit loan involves several steps, ranging from filling out the application to receiving funding. To begin, complete the loan application form available on the lender’s website, providing information about your income, banking activities, and contact details. Upon submission of your application, the lender will review your information and may perform a credit check to determine your eligibility for the loan.
If your application is approved, you will be presented with the loan terms, monthly payment requirements, and loan duration for review. Be sure to read the terms and conditions carefully before accepting the loan offer, as this will help you understand what the loan can and cannot be used for, as well as your interest rate and monthly payment obligations.
Upon accepting the loan offer, the lender will disburse the loan funds directly to your bank account. It’s important to note that the funding time may vary depending on the lender and your specific circumstances. Some lenders may offer same-day or next-business-day funding, while others may take several days to process your loan.
In summary, applying for a bad credit loan involves completing an application, reviewing the loan terms, and receiving funding. By understanding the application process and being prepared to provide the necessary documentation, you can improve your chances of securing a bad credit loan.
Understanding Bad Credit Personal Loan Fees
Understanding the various fees associated with these loans is critical when considering a bad credit personal loan. Some common fees include origination fees, prepayment penalties, and late payment fees.
Origination fees, also known as an origination fee, are charged by lenders to cover the administrative costs associated with processing a loan application. These fees are typically deducted from the loan amount before the funds are disbursed, resulting in a lower loan amount. Prepayment penalties are fees charged by some lenders if you repay your loan early, as this can result in the lender receiving less interest over the life of the loan. Late payment fees are charged by lenders when you fail to make a payment on time. These fees can vary depending on the lender and the specific terms of your loan agreement. It’s crucial to review the fees associated with your loan before accepting any offer, as this can help you understand the total cost of your loan and make an informed decision.
In conclusion, understanding the various fees associated with bad credit personal loans, such as origination fees, prepayment penalties, and late payment fees, can help you make an informed decision when selecting a lender and loan offer.
Spotting Personal Loan Scams
Be aware of potential scams and fraudulent lenders when searching for a bad credit personal loan. Some common red flags to watch for include:
- Offers featuring no credit check or guaranteed approval
- Lack of a state license
- Requests for payment via gift card
- Lack of fee disclosures
To protect yourself from personal loan scams, follow these tips:
- Be cautious when providing personal information or upfront payment to a lender.
- If a lender requests payment via gift card or other untraceable methods, this may be a sign of a scam.
- Always research the lender’s reputation and verify their state license before submitting any loan application.
If you suspect you have been a victim of a personal loan scam, it’s essential to take action quickly. Here are the steps you should follow:
- Contact your local police department to report the scam.
- Contact your state attorney general to report the scam.
- Contact the Federal Trade Commission (FTC) to report the scam.
- Contact the FBI to report the scam.
- Visit IdentityTheft.gov and follow the instructions provided on how to track your finances and credit for any further suspicious activity.
By being vigilant and aware of the warning signs of personal loan scams, you can protect yourself and your finances while searching for a bad credit personal loan.
Navigating the world of personal loans for bad credit can be challenging, but with the right information and resources, you can find a loan that meets your unique financial needs. By understanding the various types of loans available, the factors that affect your credit score, and how to spot potential scams, you can make informed decisions and secure the funding you need to achieve your financial goals. Remember, knowledge is power–so arm yourself with the information in this comprehensive review and take control of your financial future.
Frequently Asked Questions
What’s the easiest loan to get with bad credit?
Secured, co-signed, and joint loans are the easiest loans to get approved for with bad credit, as they rely on collateral or another person’s creditworthiness to make up for a low credit score.
Can I get a loan with 500 credit score?
It may be possible to get a personal loan with a 500 credit score, but you’ll likely need to provide proof of income and employment history. Be sure to ask about any fees and interest rates associated with the loan before proceeding.
What is a bad credit loan?
A bad credit loan is a personal loan specifically designed for individuals with poor credit scores or limited credit history, enabling them to obtain funds despite their financial difficulties.
How can I improve my chances of qualifying for a bad credit loan?
Compare lenders and their requirements to improve your chances of securing a bad credit loan.
What fees are typically associated with bad credit loans?
Bad credit loans often incur origination fees, prepayment penalties, and late payment fees.