If you’re confused about whether you can get loans with bad credit or not, let us clear that doubt—you can. While it might not be easy, it is not impossible. You may have a confusion about what options you have, which type of loan to choose, and how to pick the best one.
Usually, credit scores in the range of 300 to 579 are considered very poor. Bank loans require a score between 620 and 670. However, there are as many as eight types of loans for bad credit, and we’ll help you understand each of them in detail.
Most of them are convenient enough to surpass credit score checks, grant you approval, and let you access funds on the same day you apply. As a give-and-take, lenders charge you higher interest rates or terms that seem unfair.
But the key is to know that you’ll find all sorts of options, and some lenders offer low interest rates even with no credit check. As long as you’re comparing your options and then choosing the best one, there’s still hope that you can get the money you need quickly despite poor credit.
Types of Loans for Bad Credit
1. Personal Loans for Bad Credit
Apart from banks, many alternative lending companies offer personal loans to people with bad credit. These are unsecured loans that can be repaid in monthly installments over a fixed period.
You don’t need to offer collateral (an asset you give to the lender as a security for the loan), and there are mostly no requirements for a co-signer. You can use personal loans for bad credit to pay for various expenses, be it debt consolidation, wedding costs, or anything else.
Interest rates could be higher than if you had a good score, but overall, it is still possible to shop around, compare different lenders, and find low rates.
2. Payday Loans for Bad Credit
Payday loans, also referred to as cash advances, are short-term loans that give you access to smaller amounts of money. You may use these loans to cover immediate expenses that cannot wait until your paycheck.
Borrowers receive funds altogether, and they have to repay in full in a few weeks’ time. Most lenders allow payday loans for bad credit as well. However, the interest rates are extremely high (often more than 400 percent!).
The good thing about payday loans is faster approvals and no credit checks. However, the potential debt cycle you may fall into is also something to be considered before borrowing.
3. Secured Loans for Bad Credit
Secured loans are where collateral is involved as a security for borrowing the loan. You give your lender a lien on one of your assets. In case you fail to repay, the lender takes possession of the asset in order to compensate for the loss.
You must have heard about pawn shop loans, title or auto loans, mortgage loans, etc. These are all secured loans with different types of collateral involved. For example, for a pawn loan, you may use jewelry, antiques, watches, musical instruments, etc. as a security.
Similarly, for title loans, the collateral is your car’s title, and for a mortgage loan, it is the house for which you’re taking the loan. Taking a secured loan helps you qualify for lower interest rates since the lender can rest assured that they’re not losing the money.
However, there is risk involved since you may lose your assets if you’re unable to repay on time.
4. Car Loans for Bad Credit
Car or auto loans for bad credit are specifically for purchasing a car (which is itself the collateral). These work similar to mortgage loans. The only risk here is losing the car if you fail to make the payments. Interest rates are fairly lower than those of other options we’ve mentioned. Not being able to repay, however, can also cause your credit score to drop further.
5. Installment Loans for Bad Credit
Installment loans allow you to borrow funds in a lump sum and later repay in monthly installments over a fixed period of time (which is your loan term). Due to fixed interest rates and repayment schedules, paying back is more predictable than loans that require paying back in full.
Personal loans are installment loans, and some lenders also offer payday installment loans to their customers. It is best to read the repayment terms before borrowing anything. One thing to keep in mind, though, is that if you miss a payment, your credit score will take a toll.
6. Co-Signed Loans for Bad Credit
Loans with a co-signer include another person to take responsibility for paying back the loan in case you cannot. Involving someone in your loan surely lets you borrow at lower interest rates, but it is also important to understand the consequences for the person who co-signs.
7. Title Loans for Bad Credit
As we mentioned above, title loans are secured loans where you can keep your car’s title as collateral and borrow the money you need. Approval is quick, there are no collateral requirements, and there is a risk of actually losing your vehicle in case you can’t repay.
Some lenders even let you keep using your car/vehicle while you’re still repaying. So, if you’re confident that you’ll be able to pay back on time, only then is it okay to consider taking a title loan.
8. Bad Credit Debt Consolidation Loans
A debt consolidation loan helps you combine all your debts into a single loan at a lower interest rate, which can then be repaid in fixed monthly payments. If you have multiple debts, it can naturally become hard to keep track of them individually. At times, you may even miss payments because of this, resulting in unnecessary costs and penalties.
While taking out a loan to consolidate debt, it is always important to make sure that the interest rate is lower than what you’re paying on all loans together.
Who Can Get Loans for Bad Credit?
Lenders who provide loans for bad credit do not rigidly stick to your credit score but also assess your ability to pay back by taking into account other factors. Generally, these things are checked:
- Income
- Active bank account
- Residence proof
- Government ID
- Age (must be 18+)
- Current debt
So, as long as you have an active bank account, are 18 or older, and can demonstrate a stable income, most lenders for bad credit installment loans will welcome you. Since the requirements are so basic, you’ll get instant approval when taking out a bad credit loan, even for personal loans.
Interest Rates & Loan Terms for Bad Credit
Usually, bad credit loans come with higher than usual interest rates. Therefore, you cannot rest easy when comparing different offers. But, one way to take charge of the process is by understanding the different costs involved. Once you know basic loan-related terminology, it’ll be much easier to navigate many options and find the right loan for you.
- Principal: The loan amount you’ve borrowed and owe to the lender.
- Interest Rate: A percentage of the principal a lender charges you.
- Origination Fees: A one-time fee is charged to finance your loan.
- APR (Annual Percentage Rate): Interest Rate + Origination Fees.
- Repayment Term: The amount of time you borrow your loan for.
- Installments: A recurring payment you make each month to pay back the loan.
- Late Payment Penalty: A late fee is charged for missing a monthly payment.
- Prepayment Penalty: A fee charged when you pay your loan back early.
Now that you know the most basic terminologies regarding loans, you might’ve noticed that comparing loans through their APRs is much better than considering just the interest rate. That is because some lenders tend to charge lower interest rates but high fees, resulting in an increased cost for the loan overall.
How Can I Find Good Lenders?
You’ll find a lot of lenders who are claiming to give you the “best online loans for bad credit.” But are all of them charging you fairly? Probably not. You can definitely apply with each lender individually and compare the terms to finally settle for the best rates.
But you can also apply for loans for bad credit through our website for free and get pre-approved by multiple trusted lenders first. Bad lenders are filtered out, and you’re matched with those who offer lower APRs. The application process is short and straightforward, skipping lengthy documentation.
How Loans for Bad Credit Affect Credit Score
While most lenders do not check your credit score, some lenders may perform a soft credit check. A soft inquiry is similar to checking your score, but it doesn’t affect it.
As long as you keep paying your installments, lenders do not report to the credit bureaus, and your credit score stays the same. Many loans for bad credit even help you to increase your credit score when you’re making timely payments. However, if you miss payments or default on your loan, that will cause a dip in your credit score.
How Long Does It Take to Get Approved?
If you have all the basic documents ready, it usually only takes a few minutes to get approved for bad credit loans. Once you are qualified, the lender will discuss the loan terms with you and give you a fine print entailing those terms. You should read these documents carefully before signing.
After finishing the formalities, you’ll usually be able to receive your funds on the same day. In some cases, the fund transfer can shift to the next business day, but chances are minimal.
Alternatives to Loans for Bad Credit
Still unable to decide if you should get a loan with bad credit? There are other alternatives you can consider first:
- Borrow from friends or family if the amount is small
- Try to qualify for a low-interest bank loan
- Earn extra cash part-time to support your expenses
- Ask your employer for a salary advance
- Freelance or sell your skill online to earn more money
Risks You Should Consider Before Borrowing
Getting a loan with bad credit comes with its own risks, and if you’re not well aware of them, you may fall into the trap predatory lenders set for people with bad credit. Make sure to:
- Compare APR and not interest rates for different loans
- Read all the documents carefully and understand the terms before signing
- Don’t trust lenders with sketchy websites or no contact information
- Check if the lender is licensed before taking the loan
- If a lender pressures you to sign documents, that’s a red flag
- Don’t settle for high interest rates or very short repayment periods
- Never miss any payments on your loan and avoid unnecessary charges
- Make a plan for repayment way before borrowing the loan
Final Thoughts
Loans for bad credit allow you to access the funds you need quickly and without any credit score checks. Out of the many types of urgent loans for bad credit we mentioned above, you can choose the one that is comfortable for your financial health in the long run.
A good way to apply for poor credit loans is through Best Rate Check. You’ll be able to get lower interest rates, better terms, and connect to lenders who are genuinely safe. Got more questions? Feel free to write to us in the comments below.
Frequently Asked Questions
Yes, it is totally possible to get a loan even if you have a bad credit score. Many lenders cater to the requirements of those with poor credit—some may charge high interest rates, while a few allow lower interest rates and fair terms. The key is to shop around, compare, and choose the best terms.
Payday loans and secured loans are two of the easiest ones to get with bad credit. You’ll get approved very easily, but they also come with higher interest rates and shorter repayment terms.
It is subjective to the lender. Some lenders may allow credit scores below 500, while others set strict requirements of 600 or above. This is true for bank loans as well. Reputed online lenders may give you more flexibility with the credit score needed to get approved.
Usually, loans for bad credit have interest rates ranging from 6 to 36 percent.
Most lenders don’t check your credit score, and if they do, they do so through a soft inquiry. Soft credit checks do not hurt or affect your credit score.
