Best Personal Loans for Bad Credit in 2024 - Compare Offers

When you have bad credit, it seems like it comes back to haunt you at the most inconvenient times. But, whether you have a medical emergency or your car gets totaled, there may come a time when you need extra cash fast.

You don’t have to resort to title loans or payday lenders automatically. There are actually several online lenders who specifically cater to people with bad credit.

With the installment loans below, you will receive a higher interest rate than borrowers with good credit. But, you can sometimes use them to pay off credit cards with even higher interest rates.

8 Best Personal Loans for Bad Credit

To help you with your search, we’ve compiled a list of the best online personal loans for people with bad credit history. You’ll see a diverse mix of options and ideally find the right choice for you.

• Loan Amount $250 – $5,000
• Loan Term Varies
• Min. Credit Score Varies

• Loan Amount $500 – $10,000
• Loan Term 3 to 72 months
• Min. Credit Score Flexible

• Loan Amount $500 – $10,000
• Loan Term 3 to 60 months
• Min. Credit Score None

• Loan Amount $500 – $35,000
• Loan Term 3 to 72 months
• Min. Credit Score 580 – 600

• Loan Amount $1,000 – $10,000
• Loan Term Varies
• Min. Credit Score Varies

• Loan Amount $1,000 – $35,000
• Loan Term 2 to 5 years
• Min. Credit Score 600

• Loan Amount $3,500 – $20,000
• Loan Term 24 to 48 months
• Min. Credit Score 600

• Loan Amount $1,500 – $25,000
• Loan Term Up to 60 months
• Min. Credit Score N/A

How to Get a Personal Loan with Bad Credit

Even with a bad credit score, there are several places you can go to look for a loan. One option is a local bank or credit union, especially if you’re already a member.

Credit unions – Some credit unions offer unsecured loans for bad credit with less stringent lending guidelines, and you may get a lower interest rate. The only issue is, you’ll likely need to apply in person, and you may have to wait longer to get the funds once you’re approved.

Get a cosigner – Some personal loan lenders allow you to add a second borrower to the application to include their credit and income to improve your chances of approval. The installment loan will also appear on their credit report, however, so any late payments or delinquencies affect them as well.

Home equity loans – If you have equity in your home, you may also want to consider a home equity loan.

Online lenders – It’s often the easiest and most convenient way to apply for personal loans for bad credit. That’s because there are lenders who specifically work with credit-challenged individuals.

Remember that you should only consider taking out an unsecured personal loan if you’re confident in your ability to repay it.

What to Look for in an Online Lender

The two biggest things to look at with an online lender (especially those who brand themselves as bad credit lenders) are transparency and security.

Unfortunately, the Internet is riddled with scammers and predatory lenders, but there are several steps you can take to avoid getting into trouble. In most cases, you should also avoid taking out payday loans. The interest rates on payday loans are far higher than other personal loans for bad credit borrowers.

Registered in Your State

First, make sure the lender is registered to do business in your state. You can find this out by contacting your state’s financial institution regulatory bureau.

Secure Website

Also, make sure the lender’s website begins with “https” rather than just “http” — that indicates a safe, secure site where your personal information can’t easily be compromised.

Transparency

Once you’ve established these two items, next look for transparency in fees and repayment terms. Carefully read all the fine print on the lender’s website.

You should never be asked to pay any fees upfront before receiving your loan funds. In fact, reputable lenders deduct their origination fees from the loan funds, so you never pay anything except your monthly bill.

Credit Bureau Reporting

A final tip is to check and see if the lender reports to the major credit bureaus. It helps to improve your credit score if your timely payments are regularly reported.

Prepayment Penalties

A prepayment penalty is a fee for paying off your loan early. You can also be charged a prepayment penalty for paying more than the standard payment. Obviously, you will want to look out for and avoid lenders that have them.

What to Expect with a Bad Credit Loan

When you start looking for unsecured personal loans online, it’s important to know a few different things. First, the worse your credit score is, the higher your annual percentage rate (APR) will be — both your interest rate and often your origination fee.

Don’t be surprised to see bad credit loans with an APR of 20% or more. Unfortunately, it’s also likely that you’ll only have access to lower loan amounts.

If you have really poor credit, you might only qualify to borrow $1,000 or $2,000. Pay careful attention to your actual loan needs and what your monthly payments look like. If it is really going to pinch your budget, it may not be worth it.

This is especially true if your lender requires you to use collateral for a secured loan. That’s how many lenders are able to offer bad credit loans. They have you use your personal property to secure the loan — whether it’s your car, boat, or savings account. Interest rates will generally be lower on secured loans than they are with unsecured loans.

Defaulting on a Personal Loan

If you default on your personal loan, the lender then takes possession of that collateral to offset the loan cost. This really ramps up the stakes of a bad credit personal loan, so be sure to proceed with caution.

However, if you pay off the personal loan quickly and on time, those regular payments could positively affect your credit report. This will put you on the path to a better credit score (and consequently, better credit offers in the future).

Debt Consolidation

A bad credit loan is not a great option for most people to pay off high-interest credit cards as credit card debt usually already has lower interest rates. But, in some cases, it might make sense.

If your goal is to consolidate debt, the best way to do that is to improve your credit history. Then, you can qualify for either balance transfer credit cards or debt consolidation loans. Getting a debt consolidation loan would allow you to pay off all types of debt, not just credit cards.