With bad credit, getting a loan that you need in dire times can be a hurdle on the path to achieving your dream. Fortunately, there are many personal loans available specifically designed to help people with poor credit scores to get the cash they need without going through years of paperwork and frustrating requirements. The interest rates of personal loans for people with bad credit can be quite high. That's why, if you're in the market for one, you need to research and compare loan terms carefully before you sign on the dotted line.Â
If you have poor credit, it's easy to assume that your options are limited. However, this isn't necessarily true. Several banks and financial institutions specialize in lending to people with bad credit which you can approach. These types of loans usually come with high-interest rates, but they also typically require little paperwork and can be arranged within days rather than weeks or months.Â
Seeking an alternative solution means you have to be a little more inventive. You could apply for a personal loan from one of your credit cards. Some companies even offer low-interest rates and special repayment plans (such as in-house programs that waive fees if you pay on time) to individuals with poor credit scores.
According to Experian, a consumer credit reporting company, 16% of Americans have very poor credit, or a FICO score of between 300 and 579 as per their 2019 Consumer Credit Review report.Â
Credit reports and credit scores are immensely important as it tells mainstream lenders how risky it is to extend credit to an individual. Consumers with good credit have access to competitively priced credit options from several lenders while bad credit limits their options and are more expensive.Â
Therefore, it may seem like your odds of getting approved for a personal loan are slim to none. However, certain loan companies will take into account your income, number of dependents, and other financial obligations when evaluating your application. Some of the loan providers are listed below:
If you have bad credit but are looking to borrow, LendingPoint might be a good option. It issues unsecured personal loans up to $36,500 and has an extremely fast application process (1-2 minutes).Â Interest rates vary from 9.99% - 35.99% APR, depending on your credit score.Â
With simple loan repayment terms and no collateral needed, it's a solid choice if you need cash now or soon-and if you don't get approved by other lenders because of your poor credit score. At LendingPoint, origination fees range from 3%-6%, and repayment can start as soon as one day after receiving funds.Â
Using a service like Upstart allows you to take out a personal loan using your future income as collateral. The San Francisco-based startup helps people with thin credit files or no credit history at all access personal loans. They analyze non-traditional factors to determine whether an applicant is a good risk, including a record of paying rent on time and having utility bills in his or her name.Â
With more than $300 million in funding, Upstart has loaned more than $60 million to nearly 3,000 borrowers. Borrowers can receive between $1,000 and $50,000 depending on their financial situation. Loan terms last five years, during which borrowers make payments like any other debt (APR rates range from 3% to 36%). If you pay your loan back in full within five years (and have had no major delinquencies), you get your entire initial principal balance returned as well.
Founded in 2006, Lending Club is one of America's first peer-to-peer (P2P) lending companies. P2P lending connects borrowers and lenders directly to offer loans that can have very competitive rates. To date, Lending Club has funded $16 billion in personal loans and $31 billion in business loans to more than 900,000 people. The company makes it simple for individuals and small businesses to qualify for quick online loans with terms between three and five years.Â
Borrowers can apply online in 10 minutes and know the loan status within 24 hours. If approved, they can choose between three different monthly payment options with fixed rates and a range of terms. They also have access to their account history, allowing them to make payments on time and track their balance.Â
This FinTech startup uses advanced technology to connect borrowers directly with lenders, so there are no third parties involved, which means more flexibility and much faster funding. Also, interest rates tend to be higher than traditional lending products. The application process can also be quicker; turnaround time ranges from just 3 days (for $1K) up to 45 days ($35K), depending on how much you apply for and how long it takes investors to fund your loan request.
They specialize in offering quick solutions to their customers in need of emergency funds, or who simply require assistance paying off other credit card debts.Â Their APR ranges from 6% to 36%, while interest rates can vary depending on your specific needs and monthly repayment terms. They also offer loan amounts starting at $1,000 up to $50,000.
Make sure to shop around for rates and choose a lender based on factors like customer service, terms of repayment, and any additional perks offered. Compare offers from at least three companies before selecting one based on the loan amount, interest rate (APR), and the repayment schedule/options available to you, to make a well-informed decision.Â
Whether you need cash for unexpected expenses, have a car that needs a new engine, or simply want to consolidate some high-interest consumer debt into one manageable monthly payment, there's an option out there that will work for you.Â