Personal Loans With Bad Credit

While a poor credit score isn’t always the result of being financially irresponsible, most lenders and lending institutions take it as an ominous sign of your ability to repay. 

They just don’t care about the reasons that got you in this tight position, so most of them charge higher rates and offer more brutal payment terms. And that’s how people fall into the trap of getting themselves in a loop of neverending debt. 

However, just as there are some loans you should watch out for, some personal loans can save your day without adding to your debt. To avoid making your situation worse, read on to find out about the best personal loans with bad credit and the types of loans you should avoid. 

The 5 Best Personal Loans With Bad Credit

The common thing between the following loans is that they offer high approval rates for people with fair scores (580 to 669), poor scores (300 to 579), or no credit history at all. So, let’s see what each loan offers.

1. Earnin – Best for Salaried Employees

For those whose months tend to be longer than their paychecks, Earnin is a free app that allows you to cash in on your paycheck before it’s deposited. This is especially beneficial for people who earn a fixed monthly, weekly, or hourly salary and those who work on-demand. 

Available on iOS and Android, the app allows you to enter the number of hours you’ve worked and the amount of money you should receive, then gives you access to this amount without additional fees or interests. 

Pros:

  • Issues the money within the same or next business day
  • No fees apart from the optional tips
  • Balance Shield feature protects you from overdrawing

Cons:

  • Allows you only to take out up to $100 per day
  • Isn’t available for remote workers, freelancers, and those with more than one job
  • The app accesses your personal data

2. Stilt – Best for Immigrants 

If you’re not a U.S. citizen and have bad credit, you might want to consider Stilt to take out a loan from $1,000 to 35,000 with repayment terms of up to 36 months.

The service accepts immigrants covered by the Deferred Action for Childhood Arrival (DACA) and people holding some types of VISAs. You don’t have to own a green card or a social security number to get the loan.

Pros:

  • Available for visa holders, immigrants, and underserved people
  • No prepayment penalty
  • Helps build credit as it reports to some of the major credit bureaus 

Cons:

  • APR rates aren’t clear
  • Not available in all states

3. Upstart – Best for Zero Credit History

Upstart provides accessible unsecured loans for graduates, students, and youth starting their life. Instead of judging you by your credit score or financial history, the service relies on your job history and education. 

The payment terms are convenient with the ability to repay from 3 to 5 years. Also, you’re allowed to borrow from $1,000 to 50,000, and Upstart has no limitations on what you use the money for. 

The only catch is that the interest rates range from 7.68% to 35.99%. The worse your financial and educational situation, the less eligible you’d be for the lower end of the APR.

Pros:

  • Fast and high approval rate
  • Accepts fair credit scores and blank credit reports
  • No early payoff penalty

Cons:

  • Origination fees can be up to 8% of the loan amount
  • Late payment fees reach up to 5%

4. Avant – Best Repayment Terms

If you’re not sure about your ability to pay back the loan within the following couple of years, Avant offers unsecured personal loans with repayment terms that range from 2 to 5 years. Borrowers with less-than-spotless scores can apply for the loan and get approved as soon as the next business day.

The borrowing limit is higher than that of Upstart, with the lower limit being $2,000 and the higher one $35,000. The service doesn’t issue prepayment penalties, but you’ll have to pay on time with an APR of 9.95-35.99% to avoid the late payment fees.

Pros:

  • Convenient repayment terms
  • No hard credit check
  • Accepts borrowers with fair scores
  • No prepayment penalty 
  • Quick funding with a large credit limit 

Cons:

  • Interest fees can be a bit high for those with bad credit
  • Charges origination fees of up to 4.75%

5. OneMain Financial – Most Flexible Option

If you like to take the safest route, OneMain Financial has been in the business for years and offers multiple ways for borrowers with bad credit to get qualified. Whether you’re looking for a secured or unsecured loan, OneMain financial can help you with many plans that allow you to take up to $20,000.

The interest rates are a bit high, ranging from 18% to 35.99%, but the approval process is almost instant, and the payment terms can be up to 5 years.

Pros:

  • Allows you to choose your payment date
  • Offers many types of loans for bad credit
  • Quick approval

Cons:

  • Higher APR than other options
  • Charges origination fee

Small Loans to Avoid

The worst financial decisions tend to shine when the bills pile up and you find yourself in a tight position. To avoid falling prey to loan sharks, here are a few loan types you need to avoid at all costs. 

Payday Loans

The only thing that’s good about payday lenders is that they don’t ask questions; they demand no credit checks, and their general requirements are minimal. You request $500 or less, and you get them against your paycheck instantly. 

However, you’re obliged to pay them back with an interest fee that goes up to a whopping 500%. With an interest rate as high as that, you can get bankrupt in a few months, especially that payday loans withdraw directly from your bank account, so you’ll have zero control over the process.

Pawn Shop Loans

Pawn Shop loans work by handing over a valuable asset of yours – be it a piece of jewelry, electronic equipment, or property – to a pawnbroker in exchange for lending you 25% to 60% of its value in cash. 

Not only will the pawnbroker have the liberty to sell your item if they don’t get their money back on time, but they’ll also charge you exorbitant fees of 5% and 25% a month. 

Title Loans

Similar to pawn shop loans, title loans require you to hand down your car and its legal documents to a lender as collateral to be able to borrow a certain amount of money. If you fail to repay on time, the vehicle’s possession goes to the lender.

Your Way Out of Debt!

Being in an emergency equates to being in a vulnerable state, especially if your ways out of a tight situation are limited. But just because you need a quick solution doesn’t mean you should go for the first loan you find, especially if it’s one of the avoidable three!

Any of the personal loans mentioned above would do as a quick solution for borrowers with bad credit. If you’re in a pinch and need a few bucks to hold you over until your next paycheck, we recommend that you check the Earnin app. 

On the other hand, Upstart is a great choice for those whose credit reports are blank or who want to skip the part of having a hard credit check in their reports.