Credible takeaways
- Try for a bad credit personal loan, a payday alternative loan (PAL), or a small bank loan before resorting to a payday loan.
- A low credit score often means paying a high interest rate.
- Payday loans and cash advance apps can be an easy way to get money but are often more costly than longer-term loans.
Some types of bad credit loans are better than others. Payday loans and title loans are easy to get but are short-term and high-cost, which can worsen your financial situation.
Bad credit personal loans, PALs, and small bank loans, however, can give you manageable monthly payments, more money, and improve your credit score. Learn which loan options to consider, which loans to avoid, and what to do if you already have a “bad” bad credit loan.
Where to get a bad credit loan
Cost and availability are two things to keep in mind if you’re trying to get a bad credit loan. The cost of a personal loan, for example, is usually expressed as an annual percentage rate (APR), which accounts for the interest rate and any upfront fees. In general, a lower credit score means paying a higher APR. That’s why it’s crucial to compare APRs between the loans you’re considering to see which is the most affordable.
Online lenders
Several online lenders offer personal loans for bad credit. A personal loan provides a lump sum of cash that you repay in fixed monthly payments over several months or years. Some lenders, like Upstart, consider applicants with poor credit or no credit history, but most require a hard credit check when you apply. Others, like 60MonthLoans, only require a soft credit pull. Some online lenders, such as Oportun, OneMain, Upgrade, BestEgg, and Reprise, also offer secured loans that may be easier to qualify for with bad credit.
Personal loans are generally much less costly and more manageable than no-credit-check options like payday loans. Plus, you can compare estimated rates from multiple lenders to find the best deal.
“The internet is a great equalizer in shopping and comparing loan terms and rates,” says Mark Williams, risk-management practitioner and master lecturer at Boston University’s Questrom School of Business. “With the proliferation of nonbank fintech lending companies, borrowers have many more options than payday loans to obtain competitive borrowing rates.”