Personal loans for bad credit are available for those with a credit score of under 580. Many lenders tailor their loans for these borrowers and offer fast funding and simple applications. However, before you apply for a personal loan with bad credit, it’s important to compare the rates offered by different lenders.  

Getting a loan with no credit history or bad credit can be challenging. You’ll need to submit a loan application and agree to a credit check for approval. Borrowers without a track record of paying bills on time are risky for lenders. However, this doesn’t mean you can’t get a loan.

Many lenders specialize in offering personal loans for individuals with bad credit, some with instant approval. However, these lenders may charge higher interest rates, so it’s important to do your research before signing the agreement. In this article, we provide tips to compare lenders, how to apply for loans, and options that may be available.

The Best Personal Loans for Bad Credit

We reviewed 20 lenders offering personal loans for bad credit based on loan amounts, repayment terms, APRs, customer reviews, and eligibility requirements to shortlist our top five recommendations. 

Table showing the top five personal loans for bad credit
  • Loan Amount: $1,000 to $50,000
  • APR: 8.49% to 35.99%
  • Term: 2 years to 7 years
  • Credit Score: 600

Pros:

  • Low credit score requirements
  • No prepayment penalty
  • Quick funding, usually on the next business day 

Cons:

  • You may have to pay origination fees, which are quite high
  • High fees, such as returned payment fees and late fees

Who It’s For

Upgrade loans are a good choice for those who need to borrow at least $1,000 or want a larger amount for consolidating debts.

  • Loan Amount: $1,000 to $50,000
  • APR: 6.40% to 35.99%
  • Term: 3 years to 5 years
  • Credit Score: 300

Pros:

  • Accessible to borrowers with very low or no credit score
  • Lower minimum interest rate compared to competitors
  • No prepayment penalties

Cons:

  • An origination fee of up to 12% of your loan amount
  • The repayment term is not very flexible

Who It’s For

Ideal for those who have no credit history or a very low credit score.

  • Loan Amount: $2,000 to $50,000
  • APR: 8.99% to 35.99%
  • Term: 3 years to 5 years
  • Credit Score: 600

Pros:

  • Borrowers can get offers within minutes
  • Funding in as little as 24 hours
  • No prepayment penalties

Cons:

  • Not available in all states
  • An origination fee of up to 8.99%

Who It’s For

Best Egg is a good option for borrowers with poor credit. The lender also offers secured loans, which are easier to get approved for.

  • Loan Amount: $2,000 to $35,000
  • APR: 9.95% to 35.99%
  • Term: 1 year to 5 years
  • Credit Score: 550

Pros:

  • Option to pre-qualify for personal loan with a soft credit check
  • Fast funding
  • Wider range of repayment terms

Cons:

  • No secured or joint loans
  • May have to pay an origination fee

Who It’s For

Avant loans are a good choice for those who want flexible repayment terms and the ability to prequalify.

  • Loan Amount: $1,500 to $20,000
  • APR: 18% to 35.99%
  • Term: 1 year to 5 years
  • Credit Score: 500

Pros:

  • Unsecured and secured loans are available
  • Access to physical branch locations
  • Ability to apply with a co-signer

Cons:

  • Higher interest rates compared to competitors
  • Not available in all states

Who It’s For

OneMain Financial is suitable for borrowers with fair credit, those who prefer to speak to someone in person, or borrowers who have been turned down elsewhere.

Types of Personal Loans for Bad Credit Scores

While most people consider personal loans unsecured debt, several other varieties, including secured loans, are available. Traditional banks, credit unions, and online lenders offer personal loans. Online personal loans may be best for you if you're looking for an easy application process and quick funding.

Secured Personal Loans

Secured loans for bad credit require collateral, like a car or home. Usually, these loans offer higher loan amounts and more favorable terms and rates because there is less risk for the lender. If you have poor credit, it may be easier to qualify for a secured personal loan than an unsecured one. This is a good option for those who are confident that they’ll be able to repay the loan.

Consider items that may qualify for collateral and check if the lender will accept them. Secured debt does come with some risks. Keep in mind that if you default, you’ll be at risk of losing your car or home.  

Unsecured Personal Loans

Unsecured personal loans do not require any collateral. You will qualify for an interest rate based on your creditworthiness. For those with bad credit, it may be harder to qualify for better rates, but there are lenders that cater specifically to borrowers with poor credit.  

If you do qualify, keep in mind that APRs may be higher. It is important to determine if you’ll be comfortably able to pay the installments each month. Shop around, prequalify for the personal loan you're interested in, and compare your options to get the best possible deal.

Joint Personal Loans

With a joint personal loan, two people can apply for a loan together. This is a good option when you do not have good credit, meet the approval requirements, or need competitive interest rates. When you apply for a joint personal loan, the lender will consider both applicants' credit scores and personal and financial information. If approved, both borrowers will be legally responsible to repay the loan.

This type of loan is best for those who are confident that they’ll be able to repay the loan. If you fail to make payments, your co-applicant’s credit may also take a hit. This can affect your relationship with the individual. While this is a good way to increase the odds of approval, it does come with risks that you should consider.  

Pros and Cons to Consider About Personal Loans for Bad Credit

Like any other type of loan, personal loans for bad credit come with benefits and drawbacks. You need to carefully consider these to avoid getting into unwanted debt later.

Pros

  • Loans that are tailored for borrowers with less than average credit scores are likely to have flexible lending guidelines. They may consider other factors when evaluating your application.
  • The interest rate on these loans is higher when compared to other personal loans, but they still have lower interest rates when compared to credit cards.
  • They may help you build credit and improve your credit score if you continue to make timely payments throughout the life of the loan.
  • Quick access to funds. Many online lenders offer same-day approvals.

Cons

  • Interest rates tend to be higher for personal loans with bad credit because they depend on your creditworthiness.
  • There may be high fees involved that can increase the total cost of your loan.
  • If you take out a secured personal loan and default, you may risk losing your car or home.

How To Compare Lenders

There’s no single best lender for personal loans for people with bad credit. Here are some steps you can follow to compare different lenders and find the best bad credit loans:

  1. Determine the right type of loan for you. Joint personal loans, unsecured loans, and secured loans are some of your options. Know what each one offers before you select one.
  2. Prequalify with a few different lenders, preferably three, before you start comparing your options.
  3. Look at the total loan cost instead of just the interest rates. Loans may come with fees, such as origination fees, late fees, and prepayment penalties that may impact how much you pay. Compare the APR range instead.
  4. Pick a lender that offers flexible loan terms. A longer-term can reduce your monthly installment, but you’ll pay more in interest. With a shorter-term loan, you’ll pay less interest and can pay off your debt sooner.
  5. Check if the lender offers any useful perks, such as online apps and tools or introductory annual percentage rates.
  6. Look at customer reviews and their experience with different lenders. Pick a lender offering good customer service in person, over the phone, or through online chat.  

Five Alternatives To Consider

When you have bad credit, personal loans come with a higher interest rate. If you’re not careful, the debt may become difficult to manage in the future, and you may have to consider debt consolidation, debt settlement, or other methods to pay off your debts. Here are a few other alternatives to consider if you can't qualify for an affordable personal loan with your credit score.

1. Family Loan

If you have family or friends willing to help you, borrow from them instead of taking out a personal loan. You’ll need to work out repayment terms, interest, and payment schedules with them in advance.

2. Peer-to-Peer Loans

Peer-to-peer loans are also known as P2P loans. These loans are not offered by financial institutions but by individual investors. They may be more likely to work with borrowers with poor credit scores and usually offer lower interest rates.

3. Payment Plans

If you need a loan to cover utilities or other bills, consider contacting the service provider directly to see if they have a payment plan. Consumers facing financial hardship can often get an extension or hardship assistance through an affordable payment plan.

Another option is to apply for a hardship loan for bad credit. Many lenders offer personal hardship loans that can be used for any type of expense.

4. Medical Bill Assistance

If you are facing a lot of medical debt, you can get assistance in the form of a payment plan, medical credit cards, and negotiators. Many of these options come with interest and fees, so compare your choices to find the most affordable.

5. Increase Your Income

While this may not be possible for everyone, consider increasing your income through a side gig to avoid taking on any bad debt loans. You can also ask your employer if they can provide you with increased hours. Other than side gigs, you may also be able to earn extra cash by selling items on eBay or Marketplace.

Get a Personal Loan for Bad Credit

If you have less-than-average credit, getting a personal loan can be challenging. Although there are several lenders with more relaxed qualifying requirements, you may pay higher interest rates. Take the time to compare your options so you can secure the most affordable loan offer.

If you've already accumulated a debt of more than $10,000 through credit cards, personal loans, and payday loans, be sure to consider debt relief options like debt consolidation loans, debt relief, and debt management. Contact TurboDebt for our free consultation to see how we can help you find the right debt relief option for your individual needs.