If you've had past financial troubles there may well come a time when you need to compare the best loans for bad credit. You certainly aren't alone if this happens to you - 56% of American consumers have subprime credit scores. There are options if you find yourself in need of a lump sum but have less than perfect credit.
Lenders who offer personal loans for poor credit typically have criteria you have to meet in order to qualify. They'll examine your credit history and employment information, and you may qualify with a low score but you'll probably pay higher interest. Below, I've put together a list of providers of the best loans for bad credit.
The Best Bad Credit Loans: What to Consider
The Best Bad Credit Loans
Obviously, the best case scenario in a financial emergency is to find a way to pay cash. However, sometimes life happens, so if you do need to borrow money here are some things you should consider before using an online lender:
How does the lender treat its customers? An easy way to research this is by looking up the company directly on the Better Business Bureau's website. They assign a grade from A to F taking factors such as customer service into account. I would also strongly advise reading consumer reviews, as these can be a wealth of detailed experience with the company.
Does the lender charge for anything other than the interest rate on the loan? Some online lending institutions might give you a loan then charge you a specific percentage of that amount as an origination fee. For illustration purposes, say you borrow $5,000 and the lender assesses a five percent origination fee on your loan; this equates to $250 you have to pay just for using the service. Therefore, be sure to investigate the fees a lender charges before going with them.
3. Repayment terms
Many lenders who offer loans for bad credit have limited terms, meaning you could have anywhere from one to three years to repay the debt. With this in mind, it's important to know the terms before signing a contract because shorter repayment terms mean higher monthly payments that can eat away at your budget.
Sometimes the best place to get a loan with bad credit is with a lender that allows you to use a sponsor for your loan. In this case, your cosigner would be responsible for repaying the debt should you default. If you can find a person willing to sponsor you, the lender may give you a lower interest rate, as well as lend you a larger amount of money.
How to Get a Loan with Bad Credit
Having a poor credit score will limit your options as it pertains to borrowing money. With that said, there are some online lenders that extend credit even if you have had problems in the past. Here are some of the items to look for and strategies to employ in obtaining online financing.
Simply typing bad credit loans into Google will bring back so many results it will make your eyes pinwheel. Instead of wading through a myriad of options, which will take time and could test your patience, you should first start with local lenders.
The reason for this is many offer online and in-person options. That way if you have any questions you have a live person you can turn to. Even more importantly, if you have a good relationship with a local bank or credit union they would be a good first place to turn, as they might be able to work with you depending on your situation.
If you can't find many good local options, there are plenty of online personal loans for people with bad credit. To help you narrow down the list, here are some things you'll want to be mindful of.
First, what are the fees the lender will assess for the loan? By having a lower score, you will pay more in interest, but often lenders will try to take advantage of you by charging obscene rates and other fees that make the loan much more expensive. With this in mind, compare online lenders. Find several that offer competitive rates then research their reputation with the Better Business Bureau. If they have a good grade, then consider applying for the loan.
5 Tips for Getting the Best Bad Credit Loans
Getting a loan when you have bad credit isn't always easy, but it's doable. No matter what, when you've got a bad credit score, lenders consider you a higher risk, when loaning you money. This means you're facing limited options and high-interest rates.
Get a free copy of your credit report and make sure there's nothing damaging on it that should have been removed.
For homeowners, the home equity line of credit (HELOC) is often a go-to choice. And some people with bad credit look for personal loans from sources other than banks. These can include asking for loans from friends or family, peer-to-peer lending services like Prosper, and payday lenders. Those options aren't right for everyone, so consider your situation carefully and do your best to avoid predatory lenders.
If you're looking for a more traditional bad credit loan, use these tips to make the best decision possible.
1. Clean Up Your Credit Report
While coming face to face with a report on your financial mistakes is never fun, it's the smartest thing you can do before getting a bad credit loan. Get a free copy of your credit report and make sure there's nothing damaging on it that should have been removed. This is also a great time to check for any fraudulent activity - in other words, accounts that you did not open yourself. Next, pay off any outstanding debts that you can knock out quickly. This will improve your credit score and your confidence.
2. Know What You Can Pay
Before you take out another loan, come to terms with your monthly budget and be crystal clear on how big of a monthly payment you can afford. Don't get yourself into another situation that could damage your credit further.
If you're thinking about using some collateral to secure a loan, like your car or house, be extremely cautious. Doing so may open up some better loan options, but if you fall behind on payment you'll lose whatever it is you used to secure the loan.
3. Look for Bad Credit Loans Online
Not only can you research your options for getting a bad credit personal loan online, you can even find online-only lenders that may offer bad credit loans with easier terms.
Look at your options from both physical banks and online banks, and compare the terms they offer. Knowing all of your options is the key to getting the best loan available, and that matters when your credit is struggling.
4. Make Sure the Terms Are Clear
When you're getting a bad credit loan, it's important that your loan offers terms that you can handle. Don't move forward on any loan if the lender doesn't present the terms, including interest rate and payments. Once you're clear on those, you may even find that using a credit card instead and paying the same amount as a loan payment is a better option. If you do move forward with the loan, get everything in writing.
5. Don't Forget About Credit Unions
Credit unions operate similarly to traditional banks, but the way they're set up allows them to offer lower fees and rates with higher levels of services. See what kinds of loans the credit unions in your area offer -- there may be some attractive options.
The Best Bad Credit Loan Companies
- Simple criteria process
- Lower interest rate range
- Flexible repayment terms
- Potential offers from multiple lenders allow you to pick the best fit
- Since it’s a partnering service, you won’t deal with them directly for the loan
- Low loan max
BadCreditLoans.com is not a lender, rather it's a service which connects you with the best installment loans for bad credit. You enter your information and then receive a number of offers from which to choose. The company claims to have access to a network of lenders with interest rates ranging between 5.99% and 35.99%. Loan repayment periods vary from three months to five years.
In order to request offers for personal loans for bad credit through this service, you must be at least 18 years of age, be able to provide proof of citizenship, be employed or self-employed full time or have disability or social security income, and have a checking account in your name.
Once you receive various offers for bad credit loans, you are not obligated to accept one until you've had a chance to review the terms and provide your electronic signature. Due to the wide range of loan amounts and repayment periods, along with the ability to review several offers in a short time, BadCreditLoans.com gets a top spot on my list of the best places to get a loan with bad credit.
PersonalLoans.com Loans Review
- Quick application process
- Flexible repayment terms
- Approval for all credit types
- Pairing service, meaning they won't be the primary lender the applicant uses
- Large range of interest rates making this an expensive option for applicants with low scores.
PersonalLoans.com is not an actual lender, but rather an organization that puts people in need with other third-party lenders (peer-to-peer, not banks). As such, they may do a quick check on your credit, but the actual lender is apt to do it again and look at it more thoroughly.
PersonalLoans.com will look at your information, find a lender, and then direct you to the lender's webpage. There are no hidden fees or any cost to use the PersonalLoans.com website. The requirements for a loan from PersonalLoans.com are a credit score of 600+, with a verifiable income of $2,000 per month. They will also lend money to self-employed individuals.
Avant Loans Review
- Customer support is available seven days a week
- Transparent application process
- Applicants can check their rates without hurting their credit
- Relatively low max loan
While lenders often have different terms of what "bad credit" means and who they will lend money to, Avant lowers the bar below many others, giving access to borrowers that most other lenders won't consider at all.
In fact, they tend to focus on borrowers who have a credit score that ranges between 600 and 700. For those with a credit score lower than 580, it is unlikely that a loan is available for you. Secured loans are not available.
NetCredit Loans Review
- Customer service available seven days a week
- No origination fees and no prepayment penalties
- Reports timely payments to two credit bureaus
- Smaller loan amounts compared to other online lending options
NetCredit sounds similar to other bad credit lenders. One thing that is different is that they allow you to return the loan on the next day by 5pm CT if you do not like it or change your mind. The company is backed by Enova International, Inc., which has served more than 3 million customers.
They have an online form that quickly lets you know how much you qualify for, which will not affect your credit score. Once you know the loan amount, you can choose between several options for repayment terms. They are also unique in that they promise no late fees or prepayment fees. No other source of poor credit loans does that.
They claim that they will be offering secured loans before long. The grace period as well as NetCredit's departure from various fees, which they call their "ClearCost for Me" promise, earn this poor credit lender a spot on my list of the best bad credit loans.
Springleaf Loans Review
- Ability to apply online or at one of the over 800 branches available
- Great customer support
- A+ Better Business Bureau rating
- Loan funding options for a wide variety of purposes
- Limited customer support hours
- Criteria makes it an expensive option for those with lower credit scores
SpringLeaf has been in business for 95 years and has served as many as 3.5 million customers. They have an advantage of over 800 branch offices which enables customers to be able to apply online or in person.
One thing that they do not have on the website is a page revealing their interest rates or typical fees. Still, the company's longevity and brick-and-mortar options get my thumbs up.
Smart Strategies to Employ to Find the Best Bad Credit Loan
Before applying for the loan, consider if this loan for an immediate need or a want. If it's for a want, consider holding off until you improve your credit score. Raising your score will help you earn lower rates thereby reducing the costs of the loan.
You should also minimize the amount you need to borrow. Having a lower score means borrowing will be even more expensive, so try to save a portion of the money you need to borrow before applying (this is where the money you set aside during your trial payment phase comes in handy).
The Best Bad Credit Loans - Security
When you are ready to apply, you'll want to do several things first to make sure your information remains safe. Check the lender's website to see if their web address on its application page begins with https. This adds another level of protection that can keep your information safe.
Next, you'll want to apply using a secure internet connection. Public Wi-Fi is no good, since people can easily hack in and steal your information. Therefore, it's ideal to apply at home or even your office if need be, in order to keep your information secure. Lastly, make sure your computer has good virus protection installed. hat way you know for certain there isn't a malware program copying your information.
These things aside, applying for a loan online is easy. You'll need basic information including income from your occupation, your social security number, and how much you pay per month in housing costs (rent or mortgage). Some lenders might have additional verification requirements. For example, they may ask that you answer questions about previous loans or credit cards – information they pull from your credit report.
Additionally, some lenders might ask for documentation to support what you put on the application. Therefore, it's wise to have your most current pay stubs and a bank statement ready to send to them if need be.
Personal Loans for Bad Credit - Compare Offers Carefully
Because lenders of any kind will vary considerably in their terms, it is necessary to compare bad credit loan offers in order to determine which one is right for you. A loan offer may vary in thousands of dollars, and some may cost you thousands of dollars more in interest! Other offers may only give you four years to repay it, but another lender may give you five years.
Never Borrow More Than You Can Pay Back
Being that your credit score is not as high as it could be, you do not want to make it any worse. A credit score is based primarily on how well you maintain your monthly payments. When they are not as consistent as they should be, your credit score suffers. In order to raise it back up to where it needs to be, you must make your monthly payments on time and you must pay at least the minimum amount.
Alternatives When Using Online Loans for Bad Credit
An alternative to a large bad credit loan with high interest would be to get a small one that can be paid off rather quickly. If you can afford to repay your first loan faster, this option would enable you to raise your credit score a bit. In turn, this could enable you to borrow more, get better interest rates, and also possibly get a longer repayment period.
Keeping these factors in mind, it's important to first consider the need of this loan. If it isn't for an immediate need you should wait a few months to save some money so that you won't have to borrow as much. Another approach you can utilize is to find out what the monthly payment will be for the loan, then factor that into your budget. Experiment for a few months managing without that amount (setting it aside instead of spending it) before committing to the loan to ensure you can make the payment comfortably.
Advice for Finding the Best Loans for Bad Credit
When you are looking for the best bad credit loan advice, you need to be extra careful. Some lenders will try to take advantage of you.
Look over the loan details carefully
Many bad loan lenders would be very glad to get you to sign on the dotted line without looking at the details of the loan. This is why it's crucial to perform a comparison with what other lenders have to offer. Look over the loan agreement carefully to make sure of the terms. Check the total loan amount, the interest rate, any additional fees, and the size of the monthly payment. Also be sure to look at late fees. Learn more tips about how to get bad credit loans.
Never borrow if you do not have to
If you are able to hold off borrowing money, it really is a good idea to wait. Getting a loan for debt consolidation can be a good way to go if it will enable you to get a better handle on your debt and get lower overall monthly payments. The one thing to remember about this method, however, is that the longer repayment period may also result in paying more in interest than you would with a shorter term.
The best way would be to increase your payments as much as possible each month to get debt free as soon as possible. Some of the above bad credit lenders mention that you can use the loan for any purpose, including debt consolidation, vacation, new car, etc.
Look over the loan agreement carefully to make sure of the terms. Check the total loan amount, the interest rate, any additional fees, and the size of the monthly payment.
A couple of them emphasize only obtaining the loan for debt consolidation. Using a loan for bad credit for anything other than debt consolidation does not make much sense because it only means more debt! Don't pay for anything else on credit!Watch for an early repayment penalty. Some lenders will have a clause in the agreement that declares you will need to pay an extra fee if you pay off the loan early.
Most likely, it means you will really not be saving much money by doing so. Instead, look for lenders that do not charge this fee, enabling you to save money in interest. There is, unfortunately, a downside to poor credit loans that you will want to know about before getting one.
Ultimately, personal loans for poor credit are available if you need them. Often, you can apply online, find out if you qualify within minutes and even receive funding in as little as one business day. However, it's important to be mindful of the fees the lender charges, which can reduce the amount of money you can borrow. As with all forms of borrowing, it's important to budget the monthly payment to make sure it fits into your finances first.
If you think you might be able to qualify for a wider range of loans, take a look at our best personal loans review. If you are looking to consolidate existing student loans take a look at your best student loan consolidation options.