Best Bad Credit Loans in December 2024

If you have bad credit, you may think it’s impossible to get a personal loan. Fortunately, that isn’t always the case. There are plenty of financial institutions willing to work with borrowers who have poor credit scores, but it’s important to do your research to determine the best loan for you.

Find out about the best personal loans for bad credit, how to choose a loan, the types of personal loans for bad credit, and how to avoid scams.

Best personal loans for bad credit compared

Our recommedations for the best personal loan for bad credit

Best for flexible payments: OneMain Financial

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 draws of OneMain Financial is the ability to change your payment due date once a year up to a maximum of two times over the life of the loan. This makes OneMain Financial a flexible choice if your circumstances change and the original due date no longer works for you. OneMain approves loans between $1,500 and $20,000 with an annual percentage yield (APR) range of 18.00% to 35.99%. Loan terms range from two years to five years.

Best for welcome bonus: Upgrade

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 a good option if you’re considering opening a new checking account. An Upgrade personal loan has an APR between 8.49% and 35.99%, and loan terms range from two years to seven years. Upgrade also has a relatively wide borrowing range of $1,000 to $50,000.

Best for short credit histories: Upstart

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, which could be ideal for younger borrowers just starting out. Upstart offers 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

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. You can borrow anywhere 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® Bank

Discover® is so confident that its rates are the best (6.99% to 24.99% APR) that it offers a 30-day money-back guarantee on its personal loans. If you find a lower rate with another lender within 30 days of your Discover loan approval, you can return the money interest-free. This can help assure you that the APR you’re getting is among the lowest out there, which will decrease your long-term borrowing costs. Loan terms range 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

If you own your home, you could get a lower APR by choosing a secured loan from Best Egg. The secured loan uses collateral in the form of fixtures attached to the home, such as light fixtures, built-in shelving and cabinets, and bathroom vanities. If you default on your loan, Best Egg can reclaim its investment by seizing these fixtures, which in turn allows the financial institution to offer a lower interest rate since it’s a lower-risk loan. The APR on a Best Egg secured loan ranges from 8.99% to 35.99%, and you can borrow between $2,000 and $50,000 for a term of up to seven years.

Best for low fees: Happy Money

Happy Money is transparent about its fees—or lack thereof. Although you may need to pay an origination fee (typically between 0% and 5%, depending on the loan amount, loan term, and APR), you won’t see a single other fee during your loan term. That means there are no fees for applying, late payments, or early payoff, and no annual fees or returned check fees. Happy Money’s loans range between two and five years and have 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

When you apply for a personal loan with Avant, you could receive a decision within minutes and funds can be deposited as soon as the next business day. That makes it an excellent choice if you need money quickly and if up to $35,000, Avant’s maximum loan amount, is sufficient. Interest rates range from 9.95% to 35.99%, and loan terms range between one and five years. You can apply quickly and easily online and, once approved, manage your loan easily through the Avant Credit app.

Best for small loans: PenFed Credit Union

If you don’t need to borrow thousands of dollars, PenFed Credit Union may be the best option for a personal loan—you can borrow as little as $600. Membership is required to get a loan from PenFed, but you don’t need to be affiliated with the military and the application process only takes a few minutes. PenFed membership comes with numerous benefits, such as discounts on car rental, tax preparation services, homeowners insurance, and even flowers. A personal loan from PenFed comes with an APR range of 7.74% to 17.99%, and loan terms are between one and five years.

Best for large loans: Lightstream

Lightstream offers a variety of different loan types for anything from debt consolidation to home improvement projects. Depending on the type of loan you take out, your term could be as long as 12 years. Lightstream also offers a high maximum loan amount of $100,000 on some loans, and an APR ranging from 7.99% to 24.49%. In all, Lightstream is a solid choice if you’re looking to fund a large project and want to take your time paying off the loan.

Best for joint personal loans: Lending Club

If your income is too low to borrow the amount of money you need, a joint personal loan from Lending Club may be your best option. This type of loan is for two co-borrowers, which can make getting approved easier. With this type of loan, you and your co-borrower are equally responsible for repaying the loan, so if you miss a payment, it will affect both credit scores. Lending Club offers personal loans between $1,000 and $40,000 over three to five years and interest rates fall between 9.57% and 36.00%.

Methodology

To determine the best bad credit loans, we looked at factors such as APR (the cost to borrow the money), loan terms, and loan amounts. We gave points to financial institutions for having easy application processes and being quick to approve and disburse funds. We also looked for financial institutions with unique features, such as the ability to add a co-borrower to a loan or welcome bonuses for taking out both a loan and a credit card. The financial institutions mentioned here were the ones that stood out to us the most.

How to select the best lender when you have bad credit

Getting a loan can be difficult when you have bad credit, but it isn’t impossible and options do exist. There are several things you can do to compare lenders and find the best personal loan to suit your needs and financial situation.

• Decide on the type of loan. Before you start looking at specific lenders, you’ll need to determine the best type of loan for your needs. For example, if you want a secured personal loan, you need to make sure your chosen lender offers that option.
• Choose a loan term. The term is the amount of time you have to repay the loan. It may be as little as one year or as many as eight years, depending on the lender and the loan amount.
• Get prequalified. The prequalification process can tell you what rates you’ll likely get without affecting your credit score. Get prequalified with at least three lenders so you can compare rates and pick the one that works best for you.
• Determine overall costs. The interest rate is only one cost to consider when choosing a loan. Some lenders may have origination fees as well as fees for late payments or early payoff. If a loan has a low interest rate but a high origination fee, you may be better off choosing one with a higher interest rate but no origination fee to keep your costs down.
• Read reviews. Look into what current and former customers have to say by reading online reviews or consult with expert comparison reviews. An abundance of negative reviews could be a red flag and a sign to look elsewhere.

Types of bad credit loans

There are several types of loans you may consider if you have bad credit. Some—for example, unsecured loans—are harder to be approved for but may offer the best terms. Others, such as payday loans or cash advance loans, are good last-resort options but shouldn’t be your first choice due to their high interest rates.

• Unsecured loan. An unsecured loan is not secured by collateral. It’s riskier for the lender to approve this type of loan for a borrower with bad credit as, in the case of default, it won’t have anything it can automatically seize to recoup what it’s owed. If you have bad credit, you may have trouble getting approved for an unsecured loan, and if you do get approved you’ll likely have a high APR.
• Secured loan. A secured loan is one that’s guaranteed by collateral, such as a home, car, or other valuable personal item. If you default on the loan, the lender can seize the collateral in order to recoup their expenses.
• Cash advance loan. If you have a credit card, your provider may allow you to take a cash advance against your credit limit. This can carry higher fees than other types of loans and there’s usually a limit to how much cash you can receive. There are also cash advance apps which can give you little extra money.
• Payday loan. In a pinch, you may choose to get a payday loan, where a lender gives you money in advance of your paycheck on the condition you repay the money once you’re paid. This should be a last resort since a payday loan can come with extremely high interest rates.

Alternatives to bad credit loans

If a personal loan isn’t in the cards, there are other ways to get extra money to help pay down debt, cover medical bills, fund a home improvement project, or finance other purchases.

• Make extra income. If you have an in-demand skill, you may be able to monetize it by starting a side hustle. For example, if you have artistic talents you could do freelance graphic design work on the side. Alternatively, you can look for additional work or ask for more paid hours at your main job. Any extra income you make can go toward paying down your debt and improving your credit score.
• Consider peer-to-peer lending. A peer-to-peer (P2P) loan is where one or more investors lend you money, as opposed to a bank or credit union. However, a P2P loan may have higher fees and rates than traditional personal loans, so make sure you do your research before signing any paperwork.
• Take out a HELOC. If you own your home and have enough equity (typically 20% or more), you may be able to get a home equity line of credit (HELOC). This acts like a credit card where you are approved for a maximum amount but only borrow what you need when you need it. A HELOC can be a good backup plan to help pay for unexpected expenses, such as home repairs or emergency medical bills.
• Refinance your mortgage. Another option for homeowners is to do a cash-out refinance of their home loan. This will replace your existing mortgage with a new one that has a different rate and term. If you have enough equity you can take out a larger loan and receive the difference in cash. If you have a very-low–interest mortgage, this should be a last resort; the new rate is likely to be notably higher.

Pay Attention to Scams

Not all lenders are legitimate, and some will target people with bad credit. The last thing you want is to choose a shady lender that will end up making your financial situation worse. The following tips can help you avoid scams and find a trustworthy lender that’s willing to work with you.

• Do your research. One of the most important things you can do when taking out a personal loan is to thoroughly research the lender. Check online reviews, see if the lender is BBB (Better Business Bureau) accredited, and look carefully at the fees you’ll be charged for borrowing money.
• Don’t send any money. A legitimate lender won’t ask you to send money before approving a loan. If you’re asked to send the lender money before they will fund your loan, run far away.
• Watch out for “guaranteed approval” promises. If the lender is legitimate, they will have a thorough application and approval process that involves checking your credit history, income information, employment status, and more.
• Don’t trust an unsolicited call. Many legitimate lenders will not make unsolicited calls. If you receive a call from a “lender” asking for personal information, hang up and call back using the lender’s official number.

TIME Stamp: A loan from a reputable lender will save you from scams

The best bad credit loans can help you cover unexpected bills, pay off debt, or fund an important purchase. Thorough research can help you find the loan that best fits your needs, and prevent you from taking out a scam loan or signing up for an APR that makes repayment impossible.

Frequently Asked Questions (FAQs)

What interest rate can I expect if I have bad credit?

The exact answer will depend on the lender but, in general, you can expect to pay a high interest rate if you have bad credit. For example, if the APR range is 6.99% to 29.99%, you’ll probably pay close to the high end on your loan.

Can I get a personal loan with a 500 credit score?

You may be able to find a personal loan with a 500 credit score, but it will be difficult. In general, you’ll have more choices if you have a steady income. It’s riskier for lenders to approve loans for customers with poor credit, so you can expect to pay a higher APR.

How much money can you borrow with a bad credit score?

This willdepend on the lender. Some lenders may approve loans only up to $2,000 for customers with poor credit scores, while others may approve up to $50,000.

What are the risks with bad credit loans?

The main risks of a bad credit loan are:

• Higher fees and interest rates, which could mean it’s harder for you to make on-time payments.
• Shorter loan terms, which results in higher monthly payments.
• Negative impact on credit if you are unable to make timely payments each month.
• Possibility of needing a co-signer to take joint responsibility for paying back the loan, which can affect their credit score.

Can you get a personal loan with no credit check?

Yes, it is possible to get a personal loan with no credit check. However, you can expect an extremely high interest rate—sometimes in the triple digits—and it’s likely the loan amount will be relatively small.