Best Loans for Bad Credit in July 2025

Bad credit loan interest rates

Bad credit loan rates are affected by the overall interest rate environment, including economic factors such as inflation. They’re also influenced by your credit history, income, employment record, and outstanding debts.

To determine what your personal loan rate might be if you have bad credit, you can prequalify online. Prequalifying won’t affect your credit score and is only an estimate of the rates and terms you might receive. If you move ahead with a formal application, lenders usually perform a hard credit inquiry, which could temporarily drop your credit score by a few points.

A FICO score below 580 is generally considered a bad credit score. Borrowers with bad credit who got a loan on the Credible marketplace received a 31.96% APR, on average, over the past year (from July 2024 through June 2025). 

Related: What Credit Score Do You Need for a Personal Loan?

Personal loan historic rate trends

If you have bad credit (a FICO score below 580) and can get approved for a personal loan, you might expect an APR near or above 30%. With good credit, your APR could be closer to the 15%-20% range. Nationally, the average FICO score is 715.

The chart below shows average interest rates over the past three years for borrowers with credit scores of 720 or higher.

By the numbers

13.24% and 19.46%  — The average APRs on 3-year personal loans and 5-year personal loans, respectively, for Credible borrowers with 720 FICO scores and higher. Week ending July 20, 2025

How do bad credit loans work?

A bad credit loan is a type of installment loan, which means you pay back the borrowed amount in regular installments, usually monthly. Both the payments and interest rate are typically fixed, which means they stay the same every month.

Cost of borrowing (APR)

Personal loans typically use annual percentage rates (APRs), which account for both interest rates and upfront lender fees, to measure the cost of borrowing. Personal loan APRs can range from 6.49% to 35.99%. 

Bad credit loans tend to have higher APRs, in some cases 30% or more, because lenders view borrowers with bad credit as more of a risk. On the other hand, lenders may consider certain factors that could lower your APR, such as:

• A reliable source of sufficient income
• Collateral (a secured personal loan)
• A joint personal loan with a co-applicant
• A cosigned loan

Repayment terms

You usually have multiple options for repayment terms. Depending on the lender and the loan you choose, terms could vary from around two to seven years, with some lenders offering longer terms for specific loan purposes like home improvement.

Loan amounts

The amount you can borrow with a bad credit loan typically ranges from $1,000 to $50,000. You might even be able to borrow up to $100,000 or more with certain lenders. If you have bad credit, some of the factors that could lower your APR (including income, collateral, and co-signed or joint loans) could also increase the amount you can borrow. 

Fees

Many lenders charge origination fees to cover the cost of underwriting personal loans, and these fees tend to be higher for bad credit loans. Origination fees are typically deducted upfront from your loan proceeds and can range as high as 12%. Some lenders also charge fees for late payments, returned checks and insufficient funds (not reflected in the APR).

Funding times

The time it takes to get your loan funds varies from lender to lender. Some lenders can deposit your money the same day you’re approved, while others can take several business days.

Related: How Do Personal Loans Work?

How to compare personal loans for bad credit

Here are some important factors to consider when you're deciding between lenders or multiple loan options from the same lender.

• APR: Compare APRs between loan options. The APR indicates the cost of the loan, and lower means less expensive. 
• Monthly payment: Find a loan with a payment you can afford to make, on-time, for the duration of the loan's term. A personal loan can be an opportunity to improve your credit score, which can help you qualify for financing (and low interest rates) in the future.
• Fees: Reputable lenders are transparent about disclosing upfront fees, such as origination fees, and incidental fees, such as late fees. Look for lenders with limited and low fees. 
• Funding time: Although a few lenders can fund your loan as soon as the same day, the typical wait time is a few business days. If you need the money urgently, prioritize lenders that offer fast emergency loans.
• Discounts: Some lenders offer interest rate discounts. Common examples include discounts for setting up automatic loan payments or, with debt consolidation loans, authorizing direct payment to your creditors.
• Lender reputation: Check customer reviews on Trustpilot, the Better Business Bureau website, and Google Reviews to see what kind of experiences other borrowers have had.

Related: How To Choose the Best Bad Credit Loan Lender

Interest rates and loan purposes for bad credit

What are some common APRs and loan purposes for borrowers with bad credit? Here are the average rates on closed loans on the Credible personal loan marketplace for borrowers with FICO scores of less than 580 from July 2024 through June 2025, along with some of the most common loan purposes: 

• Debt consolidation: 31.43% APR
• Credit card refinancing: 32.73% APR
• Bills or rent: 32.41% APR
• Home improvement: 32.11% APR
• Major purchase: 33.98% APR
• Medical expenses: 32.44% APR
• Car repair: 29.99% APR

Read More: What Are Personal Loans Used For?

How to avoid personal loan scams

Unfortunately, there are predatory lenders out there who try to take advantage of people with bad credit by promising quick funding and no-credit-check loans. However, many legitimate lenders may also offer these things.

To avoid a bad credit loan scam, look out for lenders that:

• Request a fee in advance: A lender that asks for a processing fee or application fee before you apply or are approved is a scam. This is different from an origination fee, which is taken from the amount you borrow, not from your bank account.
• Ask for payment using methods that can’t be traced: Never agree to make loan payments in cash or by wire, as those methods have no paper trail that can be traced. Same with “lenders” that ask you to send payment via courier. 
• Guarantee you’ll be approved no matter what: A lender that promises to loan money to you is not reputable.
• Ask for the title on your car: This is a sign of a title loan, which is a predatory type of loan with exceptionally high fees. If you default on the loan, you can lose your car. 
• Promise “insurance” on a loan: Loans don’t require insurance, though they may be an option for some types of loans. If a lender requires money for insurance on a loan, that’s a sign of a scam.
• Ask for your bank login information: A lender doesn’t need login credentials for your bank account. That’s a sign a criminal is about to clear out your savings.

Learn More: 8 Signs of a Personal Loan Scam

A closer look at the best bad credit loan lenders

Methodology

Credible’s rating criteria incorporates 899 data points across 31 partner and non-partner lenders, spanning interest rates, fees, loan terms, repayment options, customer service, eligibility, efficiency, options for poor credit and no credit, cosigner options, discounts, and more.

Read our full methodology

Where we get our data

Credible is a personal loans marketplace that partners directly with lenders to offer loans for a wide range of credit profiles and loan purposes. Because of these relationships, we have access to the most current interest rates that real borrowers are being approved for, along with average rates by credit score and loan purpose, approval rates overall and by lender, and more. The data we use is primary source data, updated weekly, and does not include any personally identifiable information about borrowers.