Best Bad Credit Loans Of October 2023

Best Bad Credit Loans Of October 2023

  • Upgrade – Best Overall Installment Loan For Bad Credit
  • LendingPoint – Best For Fast Funding & Below-Average Credit
  • Universal Credit – Best For Comparing Multiple Offers
  • Upstart – Best For Quick Approvals
  • Avant – Best For Range Of Repayment Options
  • LendingClub – Best For Online Experience

The above personal loan rates and details are accurate as of August 22, 2023. While we update this information regularly, the annual percentage rates (APRs) and loan details may have changed since the page was last updated. Keep in mind, some lenders make specific rates and terms available only for certain loan purposes. Be sure to confirm available APR ranges and loan details, based on your desired loan purpose, with your lender before applying.

Tips for Comparing Personal Loans for Bad Credit

Consider these tips when comparing personal loans for bad credit:

  • Compare the top-end range of interest rates. Because interest rates largely depend on your qualifying credit score, you’re likely to land a rate at the top end of the range with bad credit. So, when comparing personal loans for people with bad credit, be sure to compare the maximum rate.
  • If possible, prequalify with a provider. Several providers offer the opportunity to prequalify you for a personal loan. This means you can submit details like your income information, desired loan use and housing situation to learn about potential loan limits, rates and repayment options. Prequalifying also only requires a soft credit check, which doesn’t hurt your credit score, so you can safely find the best rates.
  • Check for additional fees. Some personal loan providers charge no origination fees, late payment fees or prepayment penalties. However, there are some that may charge all or some of these fees. When comparing bad credit personal loans, be sure to look at the fee structure beyond the potential interest rate you can receive.
  • Evaluate the lender’s customer support options. If you’ve found a lender, there’s one more thing to consider before signing the loan agreement. While customer support may not seem like a big deal, it can make a huge difference if you encounter issues with payments or face a financial hardship during your repayment period. Review the lender’s customer service resources and read reviews to make sure it’s a good fit.
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The Complete Guide To Bad Credit Loans

  • What Are Bad Credit Loans?
  • What Is a Bad Credit Score?
  • 5 Types of Loans for Bad Credit
  • Where To Get a Loan With Bad Credit
  • How to Get a Loan With Bad Credit
  • How To Qualify for a Loan With Bad Credit
  • How to Identify Bad Credit Loan Scams
  • Alternatives to Personal Loans for Bad Credit
  • Methodology
  • Frequently Asked Questions (FAQs)

What Are Bad Credit Loans?

Some lenders offer bad credit loans for applicants who have had little to no time to build a credit history or who may have experienced some pitfalls. While it can be difficult to get a loan with a credit score below 580, some lenders, including those on this list, are willing to extend funds to applicants with scores between 580 and 600. Minimum credit score requirements tend to vary between lenders, so be sure to check if your score qualifies through your preferred lender.

Bad credit applicants will typically receive high interest rates and lower loan limits due to their credit scores. The lowest rates and most favorable terms are reserved for high-qualified applicants.

Bad Credit Loan Interest Rates

Lenders calculate interest rates based on a number of variables ranging from your creditworthiness and income to the size of the loan and repayment term. Because your credit score and history play a key role in determining the interest rate you receive, you should not expect the lowest rates on bad credit loans; the lowest rates are typically reserved for highly qualified applicants.

Although interest rates on our list range from about 3% to 36%, it’s more than likely that the interest rate you receive will fall toward the top end of the range with damaged credit. If you want to improve your chances of getting a lower interest rate, take time to boost your credit score before applying.

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Bad Credit Loan Fees

Bad credit loans can be a good option when others are out of reach, but they can come with high fees. Before accepting one of these loans, understand the costs so you can manage your debt and make informed financial decisions. Common fees include:

  • Loan origination fees. Origination fees cover the costs of processing a new loan application. They typically range between 1% and 8% of the total loan amount.
  • Late payment fees. Lenders often charge a late fee when loan payments aren’t on time. The amount can vary widely, but it can be $15 to $25 or even 5% of the loan amount.
  • Prepayment penalties. Some lenders charge a fee if the borrower pays off the loan before the term ends. This fee usually is around 2% of the outstanding loan balance.
  • Non-sufficient funds (NSF) fees. If a borrower’s account lacks the funds to cover a payment, the lender may impose an NSF fee. The typical NSF fee ranges from $10 to $35 or more.

These amounts depend on the lender’s policies and the details of the loan agreement. Always read the loan agreement carefully to understand all possible costs associated with your bad credit loan.

What Is a Bad Credit Score?

Based on the FICO credit score range of 300 to 850, a score below 580 is considered to be a bad credit score. Lenders refer to borrowers who fall in this range as subprime borrowers, and those borrowers tend to be riskier. A bad credit score can make it more difficult to qualify for things like a car, a mortgage or a loan for a business, so it should be in your best interest to improve your score before submitting an application.

Bad credit scores are typically a result of poor payment history, high credit usage and/or too many credit applications or hard credit check inquiries. These are some of the most important factors that make up your credit score. If you want to avoid a bad credit score, it’s best to not neglect these areas of your credit profile.

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Average Personal Loan Interest Rates by Credit Score

Lenders charge much higher rates if you have bad credit. If you have a low credit score, you can expect to pay around twice as much as someone with excellent credit.

5 Types of Loans for Bad Credit

When it comes to personal loans, there are two types you can apply for: secured and unsecured loans. However, if you’re having trouble qualifying for a personal loan, consider other loans for bad credit.

1. Secured & Unsecured Bad Credit Personal Loans

Traditional personal loans can either be secured or unsecured. Secured loans require you to provide something of value (also known as collateral), such as your car, savings account or home, to back (or secure) the loan. The lender can repossess the collateral if you fall behind on payments or default. This makes them less risky to a lender, which also means they tend to come with more favorable terms, like lower interest rates, and fewer qualification requirements.

Unsecured loans, on the other hand, are the more common of the two and don’t require any collateral. Because these loans don’t require collateral and therefore pose more risk to lenders, they typically come with more qualification requirements and higher interest rates. The loans on this list are all unsecured personal loans.

2. Student Loans for Bad Credit

If you’re trying to cover higher education expenses, a student loan for bad credit is likely the direction you want to look. Although private student loans typically require good credit, borrowers with bad credit can take out federal student loans, which don’t require a credit check. Federal loans also come with the most flexible repayment terms, including forgiveness if you work in public service or choose certain repayment plans.

3. Auto Loans for Bad Credit

An auto loan is a secured loan that uses your car as collateral, which means the lender can repossess your car if you fall behind on payments or default.

Similar to personal loans, auto loan qualifi