Getting a personal loan when you have bad credit can seem next to impossible.
Whether you're looking for a car loan or trying to consolidate existing debt, bad credit makes the approval process for a loan difficult.
Given how hard the process is, it's tempting to give up.
But giving up could mean that you're setting yourself up for costly mistakes.
For example, while your bad credit will most likely result in you paying higher interest rates (say 35% versus 7% for someone with excellent credit), that's next to nothing compared to what a payday loan will cost you.
A payday loan — which is basically a small, short-term unsecured loan — might buy you two weeks before your next paycheck but also cost you four to eight times as much after interest.
With a personal loan meant to consolidate debt from one of the lenders recommended in this article, for example, you can get a loan for only 35% if you have bad credit.
If you borrowed $5,000 via payday loan, you could end up paying $19,500 in interest fees and only $1,750 on a personal loan.
Paying off that credit card debt – card by card or by putting a big-ticket expense on a card – could mean that you'll be depriving yourself of hard earned money.
Money that could be going towards far more important things like an emergency or retirement fund.
You don't want to set yourself up with prolonged monthly payments that don't seem to make a dent in your debt and put a major kink in your lifestyle.
Sadly, horror stories about payday and other horrible predatory loans cause people to overlook how personal loans can help their finances.
One man's $50,000 debt for a $2,500 loan even made Time magazine!
Big financial decisions like whether to get a personal loan or find another source of cash can impact you for years to come, which is why it's important to know how to apply for personal loans even if you have bad credit.
You don't want to be 30 years down the road wishing you did something different today.
Did you know you don't even need to borrow from a bank?
Online peer-to-peer lending sites are competing to give you money.
No credit history?
There are lenders that cater to borrowers with a thin financial history.
And interest rates aren't written in stone!
Some lenders reward borrowers with lower interest rates and options if their income increases or if they make early payments.
By knowing where to look for affordable and reasonable personal loans you can pay less interest and get out of debt faster.
Even if you've explored taking out a personal loan before and were denied, you'll see with these great options that a smart solution to get out of debt or find affordable financing exists.
Take a look at the list below for the best places to get a loan even if you have bad credit.
Pick one place to approach for a personal loan and you'll quickly get on the path to saving money instead of paying it on excess interest.
What and what NOT to do when applying for a personal loan
Before you begin your hunt for a personal loan, you should learn a few key things first.
It's important to understand your credit score and the application process before you jump into searching for loans.
Familiarize yourself with how the process works
Every loan provider is going to want to know your credit score, your employment history, info about your income, and more.
By getting prepared, you'll move through the personal loan process easier.
Review your credit report.
Once a year you can request a full credit report online from each of the three major credit bureaus.
Do that first before you start checking rates.
Oftentimes, consumers will find inaccuracies in their reports that can be fixed with a quick phone call.
Fixed errors equal more credit points and a higher credit score.
Learn the jargon.
Familiarize yourself with the type of lenders out there, and fees and loans available to you.
There's a variety of loans, conditions, and terms available, so do your homework.
- Peer-to-peer lending. Banks aren't the only entity lending people money these days. Technology has enabled other financial services to pool money from many small investors to create a "super fund" that is chopped up and distributed to qualified applicants. Because they're new on the block and don't have the same brick and mortar costs as traditional banks, peer-to-peer lenders can be easier, savvier, friendlier, and more affordable.
- Origination fee. A fee that lenders apply simply to handle your loan. A good origination fee should range between .5-1% of the loan amount. So if you have a $10,000 loan and a 1% origination fee, you'll pay $100 in fees.
- Prepayment fee. A fee you'll pay if you pay back your loan too early. Lenders make money on you paying your loan over a long period of time (sometimes, too long). Some will charge you if you pay it all back too early, so best to shop around.
- Secured loans. This type of loan makes lenders feel more comfortable loaning you money because you've promised something to help pay off the amount if you don't pay it back (i.e. your car). Generally, you get a better rate with a secured loan.
- Unsecured loans. Because you're not promising anything to help pay off the amount you've borrowed (like your truck), you can pay a higher rate for an unsecured loan. You may need to have good to excellent credit to qualify.
Shop around. Check your rates and compare with other lending sites, banks, or credit unions.
Budget your payments. Select the rate you can afford and the terms that best fit into your budget and income.
Weigh your options. Take all circumstances into consideration, i.e. apply with a cosigner, pledge collateral, or opt for peer-to-peer lending. You might be surprised at terms you're approved for with a cosigner versus without.
Don't make simple mistakes that will slow you down
Apply for multiple loans. You can sometimes check your rates and eligibility for free with only a soft inquiry, which won't ding your credit score. But the moment you apply for a loan, a hard inquiry is made, which will ding your score.
Apply multiple times to various lenders? Your credit report will take a hit and each inquiry will stay on your portfolio for up to a year.
Apply for more than you need. Borrowing money is a contractual agreement under the terms and conditions of the lender.
The more money you borrow, the longer you're in debt, the higher your interest rates, and the more you're paying monthly. Stick to what you need.
Sign up for the ‘best deal'. Not all lenders practice honest lending. Don't get stuck under contract with hidden terms and variable or floating interest rates. Do your research and read the fine print. If it's not fixed, then it's not worth it.
Apply for the first loan approved. Never apply for the first loan that you get approved for. In doing so you risk paying higher interest fees than with another lender.
You might be bogged down with orientation fees, which might lessen the loan amount you receive when other lending institutions waive them altogether.
Let's face it, you're a risk because your credit isn't excellent, and to lenders anything that's not excellent is a risk and will cost you, the consumer.
So if you have poor, bad, fair, or even the low end of good credit, we're here to help. We've done the research to show you where to go if your credit just isn't good enough.
What equals bad credit and how we chose these lenders
Most loan lenders set a minimum FICO score requirement of 680 for borrowers, which is considered average or fair credit.
Even with 680 though, many of the nation's top lenders wouldn't blink an eye at anything less than good credit.
With that criteria in mind, we've found the best places to get a loan if you have less than good credit — say anything 679 and below.
If you have less than fair credit, your options are slim—but we've still found lenders that look at more data points than just your FICO score, and some that don't even require a minimum credit score at all.
Nonetheless, whether it's because you don't have much of a credit profile, have maxed out lines of credit, or had a series of delinquent payments in your past, some lenders won't waver from a strict focus on your credit report.
Even though these loans are the best of the best for people with bad credit, a score lower than 700 will still mean high-interest rates.
Check them out for yourself, and if you're confident you'll be able to pay back the loan with the added interest, go for it!
1. Peerform can increase your approval chances and lower your interest rates
Peerform is a peer-to-peer (P2P) lending institution. Rather than borrowing from banking institutions, Peerform has a network of personal investors willing to lend you their money.
Receive a grade based on your credit.
The application process is similar to traditional lending institutions.
You apply for a loan (ranging from $4,000-$25,000), and peer-to-peer lenders give you a "grade" based on your credit, employment, and use for the loan.
The grade you receive will range from AAA (the best score) to DDD (the lowest score), with the grade corresponding to your credit score.
If you're batting zero with other lenders, Peerform loans to applicants with credit scores as low as 600.
Pay lower interest rates. Peerform offers unsecured personal loans with fixed APRs from 5.99-29.99%, which is far better than the 35% some lending institutions can charge borrowers with terrible credit.
Calculate the origination fee. These fees range from 1-5% depending on the loan amount. Make sure you include any origination fee into the amount of money you want to borrow just to guarantee you're covered for the full loan amount.
Other fees will add up quickly. Peerform will charge you a fee of 5% of your monthly payment if you're more than 15 days late. The minimum late fee is $15.
Make sure your checking or savings account has sufficient funds at the time of payment. Each unsuccessful payment will cost you $15, in addition to a late fee and points off your credit score.
P2P lending networks may be more understanding of the borrower's financial situation despite your credit score or history of late payments.
Be sure you can handle larger monthly payments before accepting because Peerform's repayment plans are short (three-year loan terms). But if you can pay off your loan in under three years, you don't have to worry about any prepayment penalty fees.
How to apply
Fill out your Peerform profile today and see if you find rates and terms that make sense to you and your financial situation. Start your application here.
2. Apply to local credit unions for some of the lowest interest rates possible
Credit unions offer the most competitive rates with a more personalized approach.
Don't know if you have a credit union near you? Well, you can find out by visiting www.FindaCreditUnion.com.
Credit unions are privately owned and operated. Credit unions have more lenient requirements as lenders because they are owned and operated by its members. These institutions do not operate for profit and are focused on services for member-owners.
Credit unions offer lower fees.
Loans from credit unions are the most competitive in the market and worth comparing to other lending institutions when you begin your hunt.
A cosigner can help your chances of higher loan limits and lower interest rates. Credit unions also offer lower rates if you choose to pledge collateral. These banks often accept different kinds of collateral, from jewelry to automobiles.
Small banking benefits. Because credit unions are small institutions, your loan consideration and financial situation will be analyzed in a more personal approach.
You will speak directly to a loan officer and together you will understand what loan you need and what loans are available.
Borrowing restrictions do apply. There might be more restrictions to what you can borrow for. For example, if you are wanting a loan to purchase a car, credit unions will restrict what dealerships you can purchase from.
Good to know! If you'd like to learn more about how credit unions may be able to help you get a personal loan, even if you have bad credit, then read Why credit unions are better than big banks.
Credit unions save you money in interest on your loans and can afford you more money borrowed if you use your credit union as your primary money holder.
Use your money saved on interest to pay off your debt quicker to really capitalize on those low fees.
You may just find yourself a new and better way to bank by joining a local credit union.
How to apply
Visit www.FindaCreditUnion.com to find credit unions in your area. Pick up the phone and discuss what options are available to borrowers with bad credit.
3. Bad Credit Loans helps consumers with really bad credit connect with a network of lenders
Bad Credit Loans looks out for those who might have found themselves with a string of bad luck that resulted in poor credit.
The site connects them with a network of lenders that approve loans for those that might not get money elsewhere – because of that low credit score.
Provide consumers power over their credit. With the help of a large network of lenders, you can get approved quickly and responsibly for a loan with rates as low as 5.99% and as high as 35.99%.
Keep in mind these rates vary based on the amount requested, loan fees, and duration of payment. Maintaining an on-time payment history will build creditworthiness.
A large network of lenders. Their affiliate network of lenders allows anyone with bad credit the ability to find a lender willing to help.
Bad Credit Loan solicits lenders on your behalf to find the best terms for you to choose from.
Borrow responsibly. The lenders you work with at Bad Credit Loan will responsibly loan to the borrower to make sure they don't give you more than you can afford by taking into consideration your income-to-debt ratio.
The terms and conditions are transparent. Borrowers will know exactly what to expect because all of the affiliated lenders follow the Truth in Lending Act.
This means you will receive documentation of every term and condition before you accept.
Get money quickly. There's no waiting around for approval rates or a check in the mail. Bad Credit Loan's lenders can quickly move the money to your bank account.
The large network of lenders at Bad Credit Loan gives borrowers with bad credit a better chance of being accepted for a personal loan. Borrowers will know quickly whether or not they are approved.
If not? The company offers tips to improve your credit and finances until the next time you apply.
How to apply
See if Bad Credit Loan can connect you with a lender today and apply here.
4. OneMain Financial's branch representatives work to build a payment plan that works for you
OneMain Financial can help take the stress out of any unforeseen home repairs by offering a quick and hassle-free loan application and approval process.
No minimum credit score required. OneMain Financial doesn't set a minimum credit score for borrowers. Instead, it takes into consideration other financial factors to determine a borrower's eligibility.
Secured and unsecured personal loans offered. Various loans are available for borrowers with poor credit. The average OneMain borrower has a FICO score of 622. The loans range from $1,500-$25,000 with a fixed APR of 12.99-35.99%.
Increased chances for approval. OneMain allows borrowers to reapply for secured loans if denied for unsecured loans.
Although the lender looks at more than just your credit score and your credit portfolio when determining your approval and rates, you might have to apply for a secured loan to be accepted.
You can also increase your chance of approval if you and your spouse apply for a joint loan, which factors in both incomes and can increase your chances before applying for a secured loan.
The larger the loan the larger the fee. OneMain does charge an orientation fee that will be taken directly from the amount of your loan.
Let's say your fee is 3.5% on a car loan for $15,000; you'll receive $14,475 and still be making payments on the entirety of the loan (amount received and the fee).
Many branch locations. OneMain operates branches in 44 states. If you prefer to speak with a specialist, OneMain has free assistance by phone and in-person with a branch associate.
You can choose to receive your loan by direct deposit or in-person and have any final questions or advice answered at your local branch.
Receive direct customer care. Once accepted for a loan, you must meet with a loan specialist to prove your identity, income, employment, and collateral (if required).
The direct customer care doesn't stop there. OneMain's loan specialists will work directly with you, the borrower, over the lifetime of the loan to see if you qualify for lower payments if your credit score is improving or your income is increasing.
The lender also works directly with customers if you miss a payment, which could lower your credit score if you choose to forgo its services.
No penalty for getting out of debt faster. If you increase your monthly payments and are able to pay your loan off early, OneMain will not penalize you with prepayment fees.
You can pay your loan off early and get out of debt quicker by increasing your number of monthly payments.
Alternatively, consider making a one-time payment for the total outstanding balance.
OneMain offers Direct Pay. Direct Pay is a service that will automatically deduct your payment from your checking or savings account, ensuring you stay on time and in good standing with your loan repayments.
Since OneMain doesn't set a credit minimum for borrowers, your chances of eligibility increases.
The ease in payments and customer care helps to customize your experience throughout the lifetime of your loan, and also can help increase your credit score by ensuring you pay your loan on-time with the Direct Pay service.
How to apply
Apply online at OneMain.com and help consolidate your credit card debt or re-roof your home sooner rather than later.
5. Avant views you as more than a credit number but beware of fees
Avant's quick service can help consumers get approved for an unsecured loan in a pinch.
Avant accepts borrowers with low credit. The lowest they will lend to, however, is a credit score of 580.
Borrow up to $35,000. Avant loans range from $1,000-$35,000.
You're more than a credit score. To determine your APR interest rate, Avant takes into consideration your employment history and debt-to-income ratio, in addition to your FICO score.
Get money quick. The application and approval process is seamless and quick and takes about 5 minutes to check your rate.
Avant boasts that consumers can get approved for their loan and have the money deposited into their account "as soon as the next day".
Be aware of fees. Administrative fees are .95-4.75% of the loan amount if you're approved.
That means if you apply for a $6,500 loan with an administrative fee of 3.75%, the actual amount financed that you will receive will be $6,256.25.
Be sure to be on-time with monthly payments because each time you miss a scheduled payment by 10 days or more you will be charged $25.
Those fees add up quickly and hurt your creditworthiness.
With its quick application process, and comprehensive look at your income, employment history, and more, Avant deserves consideration for a personal loan if your credit is as low as 580.
That said, it pays big to improve your credit score if you're going to go with Avant (or any other loan provider). Score improvements lower interest rates.
How to apply
Start by checking your rates, which will not affect your credit score, to see if you qualify today.
6. Prosper can help borrowers with a high debt balance consolidate into one, low-interest loan
Prosper is for consumers with student loan debt or multiple high balance credit cards who are unable to apply for balance transfer cards due to their maxed out lines of credit chipping away at their credit score.
Prosper is a peer-to-peer (P2P) lending site. The lender allows multiple lenders to chip in $25 or more to pool their money into personal consumer loans.
These lenders are individuals loaning their personal money, rather than going through a bank or credit union.
Loans are available for any reason. Loans vary from $2,000-$35,000 and are available for any reason, from debt consolidation, car loans, or a wedding. Keep in mind your financial history is available to the lenders.
Short term loans available. The terms of a Prosper loan are three or five years with the option for prepayment with no fee. APR interest starts at 5.99% and can be as high as 36%.
Share your story, increase your likability. Prosper requires borrowers to create a profile, request the loan amount, and describe what the loan is for.
By sharing your financial history and why you need a P2P loan, you'll increase your ‘likability' and more lenders can fund you. It's even recommended that you share a photo of yourself.
Wait while lenders bid. Lenders earn 7.5% back on the money they lend to borrowers.
If lenders think you're a good risk, then they compete with one another to supply you the best loan.
This process takes time but can reward you with lower interest rates than typical lenders. If you need money tomorrow, Prosper isn't for you.
Like other lenders, rejection can happen. If lenders don't like your type of loan, reason for a loan, or financial history, you risk being denied a loan.
Some loans are more appealing to lenders just as some borrowers are more of a risk to lenders.
If you have time to shop around for competitive rates, let Prosper's lenders take a risk on you. Likability could play a big part in being accepted for a P2P loan.
If you're faced with crummy financial history and have a good reason for a loan, lenders might grant you money with a better interest rate than your big bank.
How to apply
Learn more about Prosper and create your profile to check your rate here to see if your starting rate is something you can afford.
7. Ascend offers personal loans with rewards programs to lower your interest and build your credit
Ascend personal loans are designed to help people with at least one year of credit history the chance to improve their bad credit scores.
No financial history? No problem. Ascend appeals to young adults with thin financial portfolios, outrageous student loan debt, or credit card debt that cripples your credit score. Borrowers can qualify for personal loans ranging from $2,000-$12,500.
Low creditworthiness rewards you a loan. The average Ascend borrower has a debt-to-income ratio of 28% and a credit score of 630 (you must have a 580 minimum). Unlike other lenders, Ascend limits its lending to borrowers with credit scores under 700.
Secured loans available. If you seek lower interest rates, you can offer your vehicle title as collateral as long as the car is paid off and covered with comprehensive and collision insurance.
This could earn you up to 20% off your interest payment per month.
Their interest rates are high. Since Ascend caters to borrowers with bad credit, its interest rates start at 27% with the option of a rate reduction through the life of the 3-year loan.
While that amount is high, many lenders that offer lower interest rates will not give them to people with bad credit.
Ascend is free of many fees. Although interest rates are high, Ascend is free of origination fees, prepayment fees, and check processing fees if you choose to pay the old-fashioned way.
Join RateRewards program for lower rates in the future. Ascend offers borrowers the option to join in its RateRewards program, centered around incentivizing its borrowers for improving their financial responsibility.
You will be asked to link your bank account to Ascend so the company can monitor your bank account and credit report to track your financial behavior.
If you meet the reward requirements, such as paying off debt, growing your savings account, and making on-time payments, Ascend will offer a one-time reduction of the borrower's monthly interest rates, which can save you as much as 50% for one month.
Ascend is still growing. Since Ascend's founding in 2015, it has not spread to every state in the US and is currently only available in 8 states (Arizona, California, Georgia, Illinois, Missouri, Oregon, South Carolina and Utah).
Since Ascend lends only to consumers with credit scores under 700, you're competing with fewer borrowers.
The company's program offers eligibility for lower interest rates during the life of your loan. It will also help you practice better financial habits, which will help you add points to your score.
How to apply
Get the personal loan you need and start improving your FICO score through Ascend's RateRewards program. Apply here to see if you qualify.
8. Light Stream determines your interest rate based on what you're buying
If you don't have excellent credit and you're having trouble finding interest rates to suit your needs, Light Stream is the lending site for you.
The credit score minimum is 660. That's just low enough to make applying from other lenders difficult.
If you have a co-signer, Light Stream will take your joint application and use the co-signers credit score for your loan, making it more affordable in terms of rates and conditions.
Not for those with a young financial history. Borrowers typically have several years of credit history.
Competitive APR interest rates. The typical APR for a loan is 2.29-17.49% for loans ranging from $5,000-$100,000 for a duration of two to seven years. Loans are available for many personal uses, from a wedding loan to a car loan.
Terms based on loan purpose. Light Stream's lending model is based on what you're purchasing.
For example, if you are consolidating your debt, your loan is riskier than if you are purchasing materials to remodel your home. Therefore, a debt consolidation loan will be charged higher interest fees than a loan used to remodel your home.
Free of fees and penalties. LightStream has no origination fee, no prepayment fee, and no late fee.
Encouraged to shop around. LightStream's Rate Beat program encourages consumers to find the loan that best suits them with the best terms and conditions out there.
If you find a lender that offers you over 0.10% less on interest under the same conditions, terms, and payment method, then LightStream will beat it.
LightStream accepts borrowers with a score as low as 660—which is not widely accepted by other lenders. Their Rate Beat program lets you research the best rates out there while extending the offer to lower them through LightStream.
If you have a long financial history and a poor score, give LightStream a try.
How to apply
If you don't have large amounts of outstanding debt and need a personal loan for something other than debt consolidation, apply for LightStream here.
9. Wells Fargo offers multiple types of secured loans
If you find yourself denied from other lenders, perhaps it's time you apply for a loan through your bank.
If you're a Wells Fargo member, then look no further for your personal loan as they offer many types of secured loans for those with bad creditworthiness.
Many loans are capped at the amount a borrower with bad credit can receive. Wells Fargo offers loans ranging from $3,000-$100,000+ depending on the type of collateral you can secure it with.
This is a good option if you are a current member with collateral to pledge.
Collateral offsets risks. Wells Fargo offers secured loans in exchange for collateral because it offsets the risk of you going rogue on a loan because they can repossess your house, savings, or CD accounts.
That might seem scary, but if you feel even slightly compelled to skip out on loan payments, then you should not borrow any money.
Collateral actually helps the borrower by giving you more options, such as better terms, lower interest rates, or a higher loan amount.
Loan amounts vary. Based on the type of collateral and equity you possess, the terms of your loan through Wells Fargo vary and are unknown until your assets are analyzed.
If you're a Wells Fargo member, look first at your bank for a loan.
Not a Wells Fargo customer?
No problem, many other financial institutions offer lending to its members as well.
By qualifying for a secured loan, you can start increasing your credit score and increase your eligibility for unsecured loans in the future.
How to apply
Are you a Wells Fargo member? Start exploring the loan benefits here.
A personal loan handled responsibly can help you rebuild your credit and build a solid financial future
From credit unions to peer-to-peer lenders, options are out there.
By knowing where to look for affordable personal loans you can pay less interest with competitive rates, and avoid any risky payday loans.
Be sure to shop around and find the best approach for you.
A personal loan can afford you a car or help with consolidating existing credit card debts into one lump payment instead of many.
By using your personal loan responsibly, you can increase your FICO score and overall creditworthiness.
Think about which of the 9 loan options work for you and fit your needs the best.
Do you know any other sources we haven't covered?
Let everyone know in the comments below!