The benefits of a personal loan can be numerous, under the right circumstances. However, if you have bad credit, you may think personal loans are well beyond your reach. Indeed, if your credit score is less-than-stellar, getting a personal loan may not be as straightforward as it is for those with ideal credit scores.
“Where can I get a loan with bad credit online?” This is one of the most common questions we are asked. Thankfully, we do have viable answers to this question. From MoneyMutual to CashUSA to OneMain Financial, there are many lenders with a good reputation offering viable, realistic loans to those whose credit is less than perfect.
Even so, there are still several facets to this subject that you are going to need to keep in mind.
Why Does Bad Credit Effect My Credit Score?
From the perspective of many lenders, credit is a simple way to gain a sense of whether or not someone is a loan risk.
Good credit means paying your bills on time, paying down debts, keeping control of revolving debts, maintaining a healthy credit mix, and other facets. Bad credit is defined by things like one or several maxed-out credit cards, late payments, or stagnant accounts. You can also just have a credit history that is too short. While that isn’t the same as having overwhelmed credit cards or heavy debt, it still puts you in the “bad debt” category.
Your credit score is important for a variety of reasons. Unless you plan to pay for everything out of pocket right then and there, you will probably need a good credit score to do things like buying a house or a car. At the very least, your credit score is going to influence the types of loans that are offered to you. This is particularly true in the context of interest rates. Good credit tends to come with the perk of good interest rates on personal loans, or whatever the specific loan type might be. Bad credit can make getting something like a personal loan very, very, very difficult.
But not impossible.
This is where the concept of bad credit loans, or bad credit personal loans, becomes essential.
What Exactly Is a Bad Credit Loan?
Regardless of why you have bad credit, one fact remains: You are going to need a loan at some point in your life. Personal loans can be used for a myriad for reasons, given that they are consumer loans. You can use your personal loan to pay for a wedding or special event. However, most people use their personal loans because they need an influx of cash as quickly as possible.
Many like to use personal loans to pay down their debt. For those who have bad credit because they have little-to-no credit, a personal loan can also help establish the good credit they will need for better loan options later on.
Personal loan options abound. No matter what shape your credit might be in, you can almost certainly apply for a personal loan. At the same time, depending upon your credit score, you’re going to need to keep an additional measure of caution in mind.
To put it another way: Yes, you can get a personal loan with no credit, as easily as you can find personal loans on bad credit. On the bad/no-credit side of things, unfortunately, you’re going to need to be even warier of the importance of choosing a reliable lender. At the bad credit level, there are more than a couple of disreputable lenders.
While personal loans can be ideal for debt consolidation, home additions/improvements, medical expenses, unexpected emergencies, or even a vacation, the loan is best used in situations with both short-term and long-term benefits. Even under the best of circumstances, a personal loan tends to come with higher-than-you-might-expect interest rates, as well as terms which tend to emphasize this is a loan you are generally expected to repay over a fairly short amount of time.
No doubt, you’ve heard about or seen these loan types online. These are short-term loans that tend to stay in the range of a few hundred dollars, although there are naturally exceptions to that particular rule. Even the best payday loan companies are going to hit you with astronomical interest rates. The most extreme examples top out at 400%! Keep in mind, you have to repay all of that over a very, very short amount of time.
A secured loan means you’re putting up something in the way of collateral. This generally falls into the category of major investments like your vehicle or home. If you can provide such collateral, your credit will have significantly less of an impact on the interest rates attached to your loan. You also run the risk of losing your collateral. You will also want to keep in mind that if you have no credit and no collateral, you can still apply, but the interest rates will be reflected in your credit rating.
This is another option that doesn’t generally focus on credit. However, you will have to provide proof of income, in terms of showing your ability to repay the loan in good time.
Bad Credit Home Equity Loan
Similar to a secured loan, this is a loan that can offer a huge sum of money over a very short time. The catch? The loan is being taken out against your home.
This concept is similar to the home equity loan, in the sense that you are once again putting up your home. However, the key difference here is that your “loan” will essentially function as a credit card. You will spend/take out only what you need, paying that off with interest rates, and nothing more. The only potential downside here, besides the possibility of losing your house, is whether or not you can refrain from over-spending.
At this point, we can start to take a closer look at how you should go about applying for a bad credit loan. This information can provide you with the final piece of the foundation necessary to figure out which of the top bad credit lenders are going to be ideal for your needs and financial background.
How Does Your Credit Score Impact Your Personal Loan APR
Before we break down the process of how to apply for a personal loan with bad credit, let’s first understand exactly what your credit score will mean in this whole endeavor. These are rough estimates, but they should give you a decent idea of what you’re going to come across.
While there are exceptions to every rule, even in the world of personal loans, you shouldn’t count on that:
- If your score range is between 720 and 850, you have what most describe as “excellent” credit. This means you can expect an APR somewhere in the neighborhood of 13.9%.
- If your score range is between 690 and 719, your credit rating is likely to be called “good.” Your APR is going to be around 18.0% as a result.
- If your score range is between 630 and 689, a “fair” credit rating will come with an APR of roughly 21.8%.
- If your score range is between 300 and 629? Unfortunately, you are in the true “bad credit” territory. The APR in this neighborhood rarely drops below 27.2%.
If your credit score is lower than 300, then your only option at that point is likely to be a payday loan.
How To Apply for a Personal Loan
Okay, if your credit rating falls somewhere in the neighborhood of 300 to 689 or so (or even below 300, since we would suggest still looking into your options), here is what you’re going to need to do next:
- Check out your credit score: Obviously, you can then compare it to the list we offer above.
- Make sure you can repay the loan: This is so important. We understand that life can throw unwanted surprises at us, but you still need to have as much confidence as humanly possible in the decision you are making. You want to have a clear idea of the terms of the personal loan institution or lender you choose, and you want to have an extreme degree of confidence in your ability to pay it back.
- Compare your options: shopping around is important, regardless of your credit score. Almost anyone can get a personal loan these days, but you don’t want to get stuck with something like a payday loan, unless you have exhausted all other possibilities.
- What about prequalification? Applying for a personal loan can impact your credit score, which can make the whole thing even more frustrating. Pre-qualifying comes with the benefit of qualifying without a hard check of your credit history. If you plan to apply to multiple lenders, look into this option first.
- What about secured loans? As we mentioned earlier, secured loans are a good way to get a loan with a reasonable interest rate, even if your credit could use some perking up. As long as you have significant collateral like a house or vehicle, you should be able to qualify.
- What about credit unions? If you’re willing to sacrifice even a small measure of speed and convenience, the personalized service and low APRs that often come with working alongside a credit union is well worth exploring in greater detail.
- Applying for the loan: Make sure you have anything and everything that might prove useful for getting a loan. If no credit check is required, you will probably only need to prove you are a citizen and have a steady job.
Personal loans rarely take longer than a week, from start to when you get your money. In many cases, you can get that money in less than a few hours.
At this point, we can finally take a look at some of the best personal loan options for people with bad credit or no credit at all.
Considered by many to be a legitimate heavyweight in the world of personal loans, MoneyMutual has a good reputation, combined with many benefits. One of the first things you’re going to want to keep in mind with these guys is that they have fairly strict limits. You can borrow upwards of $2,500 from this lender. You will also want to note that this lender is not available to residents of Connecticut or New York.
Think of MoneyMutual as an online marketplace with the entirety of its focus on lenders. This gives you the appealing ability to shop around. It also means APRs and other terms can vary wildly. They are not a direct lender, which can be problematic for some. More often than not, you’re going to get your money in less than twenty-four hours.
If you need to borrow considerably more than $2,500, you’re going to want to take a close look at CashUSA. Interest rates can get as high as 35.99%, so you will certainly want to pay attention to the loan details. Still, you can find a loan here for upwards of $10,000. You can also receive terms that give you as many as seventy-two months in which to repay the loan.
You’re certain to receive a decision on the loan in a matter of minutes. Virtually everyone is accepted, but make sure you can handle all terms and conditions if you’re applying with credit poor enough to get stuck with the high end of your APR possibilities. The funds are dropped directly into your bank account, which is a nice perk.
Keep in mind that while we’ve covered three major lenders here, including the popular OneMain Financial, we have not exhausted your options by any means. There are dozens of other lenders that you can explore if none of these work for your interests.
With loan amounts going as high as 20K, this name can be a good choice for those who need a very large sum of money as quickly as possible. OneMain has a good reputation for getting people their money in fairly short order, in addition to a good overall reputation for working with people from all financial backgrounds.
They have a good enough reputation among those with bad credit, but that can still mean an APR as high as 30% or more. There are also discounts and rewards for good customers, which might be one of our favorite things about this particular lender. Branches are available throughout most of the United States. They offer both secured and unsecured loan options.
How To Manage Your Personal Loan
We’d like to wrap things up with some basic tips on managing your personal loan:
- Give your budget a vital update: With the demands of your personal loan on the table, it would be a good idea to update your current budget to account for this addition.
- Automatic payments: This is one of the reasons why we insist on doing a lot of research and soul-searching before you commit to a lender and their terms. If you do indeed have the resources to repay the loan, you can use auto payments to set up a hassle-free system.
- Contacting your lender: In certain situations, it is a good idea to contact your lender. This includes losing your job, or anything else that might impact your ability to pay back this loan on time.