8 Personal Loans for Bad Credit

Navigating the world of personal loans can be daunting, especially if you have bad credit. Personal loans encompass a wide range of financial products, including student loans, mortgages, Lines of Credit, and Cash Advances. Lenders evaluate several factors when considering your application, but your credit score is often the most crucial. 

How do personal loans work if you have bad credit? 

Lenders are hesitant to provide loans to people with poor credit due to the increased risk of default. Therefore, personal loans for bad credit often come with additional stipulations. 

These stipulations can include high interest rates, limited loan amounts, and strict repayment terms. Since lenders want to recover their funds quickly to mitigate risk, the repayment periods are usually short. As a result, borrowers with poor credit have limited access to competitive loan options. 

What is considered good credit? 

Credit scores are measured on a scale from 300 to 850, with 300 being the poorest and 850 the best. Most lenders use the FICO credit score system, which breaks down as follows: 

• Poor credit: 300 - 579 
• Fair credit: 580 - 669 
• Good credit: 670 - 739 
• Excellent credit: 740 - 799 
• Exceptional credit: 800 - 850 

The higher your credit score, the greater your loan options. You’re also more likely to qualify for loans with great interest rates and terms. 

➢RELATED: How to Improve Your Credit Score

Types of bad-credit personal loans 

Even with a poor credit score, you still have options. 

Payday Loans 

Payday Loans are short-term, small-dollar personal loans meant to be repaid in full on your next payday. These can be a good option for borrowers with bad credit because the loan amounts are usually no more than a few hundred dollars. 

Payday Loan fees and availability vary by state, but you might expect to pay about $15 for every $100 borrowed. 

Installment Loans 

When you take out an Installment Loan, you agree to repay the money over time through regular payments (a.k.a. installments). Unlike Payday Loans, these personal loans have longer repayment periods and lower interest rates. 

With an Installment Loan, you receive the money upfront and repay it in fixed payments over several months or years, depending on the loan terms. The payment amount and schedule are agreed upon in advance, so you know exactly how much you’ll need to pay each month and for how long. 

Lines of Credit 

A personal Line of Credit is a borrowing arrangement in which a lender extends a set amount of credit to a borrower. The borrower can draw upon the credit limit as needed. Similar to credit cards, Lines of Credit give you access to a pre-determined borrowing limit. You can then tap into these available funds when needed, up to your maximum limit, and repay what you borrow over time. 

Best of all, you only pay interest on the amount borrowed, not your total credit limit, and your line stays open until you choose to close your account. 

Title loans 

Car title loans are secured loans that use your car as collateral. Once approved, you give the lender your title in exchange for a lump sum of money based on your vehicle’s value. 

During your repayment term, you can continue to drive your car as normal — but if you’re unable to make payments, the lender has the right to repossess it. 

Secured loans 

A secured loan is one of the most popular types of personal loans for bad-credit borrowers. Like with a title loan, a secured personal loan requires collateral, or something valuable in exchange for the loan. If you can’t repay the loan, the lender keeps the collateral. One common example of a secured loan is a mortgage, where the home and property serve as collateral. 

Co-signed loans 

If you can’t qualify for a personal loan on your own, you might consider asking a friend or family member with good credit to co-sign the loan with you. 

When you have a co-signer, the lender considers their credit score and history rather than just yours, allowing you to qualify for better rates and terms. However, if you can’t repay the loan, your co-signer becomes liable for the debt. 

Credit card loans 

If your credit prevents you from qualifying for traditional credit cards, you can apply for a secured credit card. To receive a secured credit card, you must pay a deposit to use as collateral, but if you use it responsibly, a secured credit card can help you rebuild your credit. 

Additionally, some credit cards allow you to borrow money against your credit limit. This type of loan is called a credit card cash advance. If you already have a credit card that offers a cash advance option, you can get quick access to cash without the credit card company re-checking your credit score. 

Pawn shop loans 

A pawn shop loan is a type of secured loan backed by collateral. If you don’t mind offering jewelry, collectibles, or other items in exchange for the loan, you can walk into any pawn shop and get the money you need on the spot. The downside, however, is that the pawn shop will keep and resell your items if you can’t repay what you owe by a certain date. 

Getting a personal loan when you have bad credit 

Even with bad credit, obtaining a personal loan is possible if you know where to look and how to prepare. Follow these steps to increase your chances of approval: 

1. Compare lenders 

Not all lenders offering personal loans for bad credit are the same. Some have higher interest rates, stricter repayment terms, and fewer loan options than others. Certain lenders are also more trustworthy because they’ve been around longer or have overwhelmingly positive reviews. 

To ensure you’re choosing a reputable lender, check their reviews on unbiased sites like Trustpilot to see what real customers are saying. 

2. Choose a personal loan option 

Once you’ve chosen your lender, review their loan options and decide which one is right for you. When making your selection, consider how much money you need, the loan terms and conditions, and whether you’ll be able to repay it on time. 

3. Fill out and submit your application 

After you find the right loan for your needs, it’s time to apply. Whether you apply online or in-store, your lender will likely need your: 

• Recent bank statements 
• Social Security number 
• Driver’s license or ITIN 
• Employment information 
• Checking account number 

4. Receive your funds 

If approved, you’ll receive your funds according to your lender’s timeline. For instance, Advance America offers same-day financing for loans approved before 10:30 AM EST. In most cases, you’ll receive your funds via direct deposit. 

➢RELATED: 7 Reasons to Use Personal Loans

Benefits of a personal loan from Advance America 

With so many direct lenders offering personal loans for bad credit, why choose Advance America? 

• Easy application. You can apply for a personal loan online or at one of our convenient locations. 
• Fast approval. We often provide instant approval decisions moments after you’ve applied. 
• Quick funding. Depending on the time of approval, you could receive your funds that same day or on the next business day. 
• Multiple loan options. We offer different types of personal loans to meet different customers’ needs. Choose between an Installment Loan, Payday Loan, or Line of Credit. We’ve also partnered with LoanCenter to connect you with online title loans. 

Since 1997, Advance America has been a trustworthy lender that cares about our customers. Explore our loan options and apply now to get the money you need as soon as today.