If you have bad credit, you may feel like getting a personal loan is impossible. But don’t worry, there are plenty of financial institutions that are willing to work with borrowers who have poor credit scores. However, it’s important to do your research and find the best loan for you. In this article, we’ll explore the best personal loans for bad credit, how to choose a loan, the different types of personal loans available, and how to avoid scams.
Best Personal Loans for Bad Credit Compared 2024
When it comes to finding the best personal loans for bad credit, it’s essential to compare your options. Here are our top recommendations for the best personal loan for bad credit:
Best for Flexible Payments: OneMain Financial
- Loan Amount: $1,500 – $20,000
OneMain Financial doesn’t disclose its minimum credit score requirements but claims to approve applicants with bad or fair credit scores, typically below 580. One of the biggest advantages of OneMain is its flexibility in payment due dates. You can change your payment due date once a year, up to a maximum of two times over the life of the loan. This makes OneMain a great choice if your circumstances change and the original due date no longer works for you. OneMain approves loans with an APR range of 18.00% to 35.99% and offers loan terms from two to five years.
Best for Welcome Bonus: Upgrade
- Loan Amount: $1,000 to $50,000
When you take out a personal loan with Upgrade, you’ll be eligible for a $200 bonus if you open a Rewards Checking account at the same time and make three debit card transactions. This bonus makes Upgrade an attractive option if you’re considering opening a new checking account. Upgrade offers loans with an APR between 8.49% and 35.99%, and loan terms ranging from two to seven years. You can borrow anywhere from $1,000 to $50,000.
Best for Short Credit Histories: Upstart
- Loan Amount: $1,000 to $50,000
Getting a loan without a lengthy credit history can seem impossible, but Upstart offers personal loans for customers with credit scores as low as 300, making it ideal for younger borrowers just starting out. Upstart provides loan terms of three and five years, and you can borrow between $1,000 and $50,000. The loans have fixed interest rates between 6.70% and 35.99%, and there’s no prepayment penalty if you pay your loan balance off before the end of the term.
Best for Mobile Banking: Lending Point
- Loan Amount: $2,000 – $36,500
When you take out a loan with Lending Point, you’ll get access to its mobile app, which can help you manage your finances more easily and lead to an improved credit score. Using the app, you can apply for a loan, keep tabs on your credit score, track your spending, and see how your finances measure up to your peers. Lending Point offers loans ranging from $2,000 to $36,500 over two to six years, with an APR of between 7.99% and 35.99%.
Best for Low APR: Discover
- Loan Amount: $2,500 to $40,000
Discover offers a 30-day money-back guarantee on its personal loans, making it confident that its rates are the best in the industry. If you find a lower rate with another lender within 30 days of your Discover loan approval, you can return the money interest-free. Discover’s loans have an APR range of 6.99% to 24.99%, loan terms between three and seven years, and you can borrow as little as $2,500 or as much as $40,000.
Best for Secured Loans: Best Egg
- Loan Amount: $2,000 to $50,000
If you own your home, you could get a lower APR by choosing a secured loan from Best Egg. The secured loan uses fixtures attached to your home as collateral. Best Egg offers an APR on secured loans ranging from 8.99% to 35.99%, and you can borrow between $2,000 and $50,000 for up to seven years.
Best for Low Fees: Happy Money
- Loan Amount: $5,000 to $40,000
Happy Money is transparent about its fees and aims to make borrowing money as easy as possible. While there may be a small origination fee based on the loan amount, you won’t encounter any other fees during your loan term. Happy Money’s loans range between two and five years with an APR range of 11.25% to 24.50%. You can borrow between $5,000 and $40,000 to help pay off debt and improve your overall credit score.
Best for Quick Funding: Avant
- Loan Amount: $2,000 to $35,000
Avant offers a quick and easy application process, allowing you to receive a decision within minutes. If approved, funds can be deposited as soon as the next business day. Avant offers loans ranging from $2,000 to $35,000 with interest rates between 9.95% and 35.99%. Loan terms range from one to five years, and you can manage your loan easily through the Avant Credit app.
Best for Small Loans: PenFed Credit Union
PenFed Credit Union provides an excellent option for those who don’t need to borrow thousands of dollars. With PenFed, you can borrow as little as $600. Membership is required, but you don’t need to be affiliated with the military. The application process is quick, and PenFed membership comes with numerous benefits. Personal loans from PenFed come with an APR range of 7.74% to 17.99% and loan terms from one to five years.
Best for Large Loans: LightStream
LightStream offers a variety of loan types for anything from debt consolidation to home improvement projects. With loan terms of up to 12 years and a high maximum loan amount of $100,000 on certain loans, LightStream is an excellent choice for those looking to fund a large project and pay it off over time. LightStream’s APR ranges from 7.99% to 24.49%.
Best for Joint Personal Loans: LendingClub
If your income is too low to borrow the money you need, a joint personal loan from LendingClub may be your best option. With this type of loan, you and your co-borrower are equally responsible for repaying the loan. LendingClub offers personal loans between $1,000 and $40,000 over three to five years, with interest rates falling between 9.57% and 36.00%.
Methodology
To determine the best bad credit loans, we looked at factors such as APR, loan terms, and loan amounts. We also considered the ease of the application process and the speed at which funds are disbursed. Additionally, we looked for financial institutions with unique features like the ability to add a co-borrower or welcome bonuses. The financial institutions mentioned in this article stood out to us the most.
How to Select the Best Lender When You Have Bad Credit
Finding the right lender when you have bad credit requires some careful consideration. Here are some steps to help you choose the best personal loan for your needs:
- Decide on the type of loan: Determine the best type of loan for your needs, such as secured or unsecured.
- Choose a loan term: Consider how long you need to repay the loan and find a lender with flexible loan term options.
- Get prequalified: Get prequalified with at least three lenders to compare rates and offers without affecting your credit score.
- Determine overall costs: Consider the interest rate, fees, and any prepayment penalties to calculate the total cost of the loan.
- Read reviews: Check online reviews and expert opinions to ensure the lender has a good reputation and provides excellent customer service.
Types of Bad Credit Loans
There are several types of loans available for individuals with bad credit. Here are the most common options:
- Unsecured Loan: A loan that is not secured by collateral, making it riskier for the lender but offering more flexibility for the borrower.
- Secured Loan: A loan that requires collateral, reducing the risk for the lender and potentially offering lower interest rates.
- Cash Advance Loan: A loan where you can receive a cash advance against your credit limit, usually available through a credit card.
- Payday Loan: A short-term loan where you receive money in advance of your paycheck, typically with high interest rates and fees.
Alternatives to Bad Credit Loans
If a personal loan is not available for your situation, there are other ways to get the financial help you need. Consider these alternatives:
- Make extra income: Explore side hustles or take on additional work to increase your income and use it to pay off debt or cover expenses.
- Peer-to-peer lending: Consider borrowing money from individuals through peer-to-peer lending platforms, but be aware of potentially higher fees and interest rates.
- Home Equity Line of Credit (HELOC): If you own a home with enough equity, you can use a HELOC as a backup plan to cover unexpected expenses.
- Mortgage refinancing: If you own a home, you may be able to refinance your mortgage to access extra cash for major expenses. However, this should be a last resort due to potential higher rates.
Pay Attention to Scams
When seeking a personal loan, be aware of scams and untrustworthy lenders. Follow these tips to avoid falling victim to scams:
- Do your research: Thoroughly research lenders, read online reviews, and check if they are BBB accredited.
- Don’t send money: Legitimate lenders will never ask for money upfront before approving a loan.
- Beware of “guaranteed approval” promises: A legitimate lender will have a thorough application and approval process that includes checking your credit history and financial information.
- Don’t trust unsolicited calls: Legitimate lenders typically do not make unsolicited calls. If you receive a call from a lender asking for personal information, hang up and call back using their official number.
Time Stamp: A Loan from a Reputable Lender Will Save You from Scams
Finding the best bad credit loans can provide the financial assistance you need while protecting you from scams. Thorough research will help you find a reputable lender that fits your needs and prevents you from taking on a loan with unreasonable APRs and fees.
Frequently Asked Questions (FAQs)
Q: What interest rate can I expect if I have bad credit?
A: The interest rate will vary depending on the lender, but generally, you can expect a higher interest rate if you have bad credit. Be prepared to pay closer to the high end of the APR range.
Q: Can I get a personal loan with a 500 credit score?
A: It is possible to find a personal loan with a 500 credit score, but it may be more challenging. Having a steady income will increase your chances of approval, but you can expect higher APRs compared to borrowers with better credit scores.
Q: How much money can you borrow with a bad credit score?
A: The loan amount you can borrow with a bad credit score will vary depending on the lender. Some may approve loans up to $2,000, while others may offer up to $50,000 or more.
Q: What are the risks with bad credit loans?
A: Bad credit loans often come with higher fees and interest rates, which may make it harder to make timely payments. The loan terms may also be shorter, resulting in higher monthly payments. Additionally, missing payments can negatively impact your credit score, and some loans may require a co-signer, affecting their credit as well.
Q: Can you get a personal loan with no credit check?
A: It is possible to get a personal loan with no credit check, but these loans often come with extremely high interest rates and relatively small loan amounts. Consider these loans as a last resort due to the associated costs.