Even though you may have been turned down for a personal loan in the past, especially from a traditional bank, it doesn’t mean you can’t qualify for one today. The rise of online lending has opened up a world of possibilities, no matter what your credit score may be.
Here’s why: online lenders with less overhead costs are more willing than a brick and mortar bank to take on the risk of a borrower with a lower credit score.
That means you can take advantage of a bad credit personal loan without even having to leave the comfort of your own home. But not all online lenders are created equally. It’s important to do your research for two reasons.
First, you need to make sure you’re working with a reputable lender who complies with federal and state regulations and takes the necessary steps to keep your personal and financial information safe.
Second, you want to set yourself up for success with loan terms you can actually afford to repay. Your chosen lender should serve as a resource on how the repayment process works. They should also be upfront with how various fees and interest rates are charged and what happens if you can’t make your payments.
To help you navigate this world of online lending, we’ve compiled a comprehensive list of personal loans for bad credit. We’ll walk you through two types of loans: short-term cash advances and long-term installment loans. You’ll also find some helpful tips for getting approved and managing your payments once you receive your loan funds.
Best Online Short-Term Cash Advance Loans
Now that you understand the differences between the different types of bad credit loans, let’s take a look at the best cash advances. Some are from direct lenders, while others offer a loan marketplace, allowing you to access multiple lenders with just one online application. You may also find lenders that offer larger amounts of money than you’d expect, but those are generally reserved for longer-term loan options.
Also, browse each lender for specific requirements regarding income and credit. It’s a good way to narrow down your best choices so you only spend your time applying to the lenders that are willing to work with your specific situation.
Choosing a loan marketplace is a smart option if you’re crunched for time and need your funds quickly. Most online applications for loans only take a few minutes to complete. In order to compare multiple offers side by side without spending a lot of time applying, these loan networks can help you get all of that information in one place.
Here are our top three short-term loan options for borrowers with bad credit. Then we’ll move onto long-term loans so you can see which ones best meet your needs and which ones you’re most likely to qualify for.
$500 - $5,000
3 to 60 months
BadCreditLoans.com is a loan marketplace, meaning you just fill out one application online and your information is then shared with multiple partner lenders. This strategy allows you to potentially receive one or more offers.
There’s no hard cut-off for credit score, and your income can come from employment, social security, or disability benefits. Once you sign a loan agreement, your repayment and loan servicing goes directly through the lender.
Features and Benefits
- No obligation or fee to check loan approval
- High approval rate despite credit history
- Funds available as soon as next business day
- Assisting people with bad credit since 1998
Up to $2,500
Features and Benefits
- Fill out online form in less than 5 minutes
- Get a decision on your loan within minutes
- Loan deposited in little as 24 hours
- Trusted by more than 2,000,000 borrowers
MoneyMutual truly does focus on short-term loans with a relatively low cap on funding. But that may be ideal in a situation where you just need to tide yourself over until your next paycheck.
The application takes less than five minutes and you could get access to your funds within 24 hours. With more than 2,000,000 customers served, they are a leader in this space. Loans not available in New York.
$500 - $10,000
6 to 72 months
CashUSA.com also partners with lenders to provide you with multiple offers if you qualify. Their credit requirements are flexible, but you’ll need to bring in at least $1,000 each month after taxes. Another benefit is that loan funding happens fast. You can get the money you need in as little as one day.
Features and Benefits
- Flexible borrower requirements
- Loan request can be approved within minutes
- Money deposited as early as 1 business day
- All credit types accepted
Best Online Long-Term Installment Loans
Installment loans help you borrow more money over a longer period of time. While you may be tempted to use them for more discretionary purposes than a financial emergency, it’s wise to remain cautious.
Remember, when you have poor credit, you’re still going to be paying higher interest rates. A long-term bad credit loan can be great for helping you cover a large unexpected sense or even consolidating higher-interest debt. But it’s probably not the best choice for remodeling your kitchen or taking a luxury cruise.
Also, keep in mind that just because you qualify for a loan doesn’t necessarily mean it’s the right choice. Reserve these bad credit loans for unavoidable moments, like when all of your kitchen appliances go out of order at the same time or when your car needs a major repair. Medical emergencies may also be worthy of a long-term loan unless you can work out an interest-free payment plan with your medical provider.
When truly needed, however, an installment loan can be extremely helpful during life’s trying times. They can give you the space in your budget each month to help regain your financial security while still tackling major expenses, whether expected or not.
Here are our top picks for online bad credit installment loans that can quickly get you the financing you need.
$1,000 - $10,000
6 to 60 months
NorthStarCash.com is a loan marketplace with no specific credit minimum, but you do need to meet a few financial requirements in order to qualify.
While regular income is a must, this can come through a variety of sources, including self-employment, regular disability, or social security benefits. From a credit perspective, you can’t have an account past 60 days late, no recent bankruptcies or charge-offs, and no pattern of late payments.
Features and Benefits
- Instant access to a national network of lenders
- Submit loan requests 24/7
- Money deposited as soon as next business day
- Free to use with no obligation
$2,000 - $35,000
24 to 60 months
As low as 9.95%
Avant is a direct lender that specializes in borrowers with bad credit. Loans are frequently used to consolidate debt, but their shorter-term loans also work for financial emergencies.
Most users report an average of a 12-point increase in their credit score within six months of taking out a loan. An installment loan that reports to the credit bureaus can be an effective way to repair your credit each month.
Features and Benefits
- Trusted by over 600,000 satisfied customers
- No prepayment fees
- Fast approval
- Funds available next business day
$1,500 - $30,000
24 to 60 months
As low as 16.05%
If you prefer a lender with a personal touch, consider OneMain Financial. You’ll need to visit a branch in person as part of the loan application process.
You also may need to secure your loan with some type of property, such as a car, truck motorcycle, or camper. There are, however, flexible payment options which include paying at a Walmart service desk.
Features and Benefits
- Trusted lender for over 100 years
- Receive a decision in less than 10 minutes
- Fixed rates and payments
- 9.3 TrustScore with over 7,800 reviews
How can you get approved for an online loan with bad credit?
Unsecured loans don’t require any collateral down and generally don’t require a credit check to qualify. Most lenders will perform a soft credit check to determine your creditworthiness.
Even if a lender markets itself as offering bad credit loans, there are still usually a few basic requirements you’ll need to meet. Each lender varies with what exactly they’re looking for. At a minimum, however, you’ll need to be at least 18 years old in order to qualify for an online loan.
Most lenders also require that you be a U.S. citizen or resident so check specific requirements on that if relevant. In most cases, you’ll also need a valid checking account. This is where you loan funds will be deposited once you’re approved and you sign your loan agreement. Because electronic transfer is so fast, you can often get your money within a few business days or even less.
For short-term loans, the lender might also require that you provide your checking account information and give them authorization to automatically withdraw your payments. This may feel uncomfortable; after all, what if you’re short on funds when your due date rolls around?
Unfortunately, it’s a cost of doing business with some lenders when you have poor credit. On the other hand, it can act as extra motivation to make sure you manage your money well enough to meet that loan obligation each month.
At the end of the day, though, you need to select an online lender that you’re comfortable with. Otherwise, you could get trapped in a cycle of debt that results in lots of expensive fees and even further damage to your credit scores. That’s why it’s crucial to compare options from more than one lender.
Types of Loans
Choosing the right type of loan is key to successfully paying off your loan and improving your credit score. Let’s take a look at both types to find out which is best for you.
Short-Term Cash Advance Loans
Cash advances can last anywhere from a few weeks to as long as a year. Because the payoff is shorter, you’ll only be able to borrow a small amount. Usually, the range starts at a couple of hundred dollars and goes up to a few thousand. In addition to your credit score, your lender will look at your income and other financial obligations to determine how much you can borrow.
While there are plenty of reputable short-term cash advance lenders out there, you also need to be wary of the not-so-reputable ones. These include payday and title lenders.
The APRs on payday loans are extremely high and people who borrow from payday lenders tend to be susceptible to getting stuck in a debt trap. That’s because these lenders make it easy to roll over your loan for another short period while taking on additional fees.
Title loans also come with additional risk because you need to sign over the title of your vehicle as collateral. If you miss a payment on your loan or can’t repay the one-time lump sum, you could quickly lose your car forever. Even if you’re in a tight financial spot and have bad credit, explore some other options to get an online loan with more favorable terms.
Long-Term Installment Loans
If you need a larger amount of cash, you could qualify for a long-term bad credit loan. These generally last between one and six years. While there are great options available, there are also a couple of things to look out for so you make the best choice.
A longer term doesn’t automatically make it better. It all depends on your individual finances and needs, but know that when you spread out payments over a longer period of time, it almost always costs you more in interest. The plus side, of course, is that your monthly payments will be lower.
Another consideration to remember with long-term installment loans is that they can potentially help repair your credit score — as long as the lender reports to the credit bureaus. As you’re searching for loans and comparing options, find out if the lender sends payment information to one or more of the three major credit bureaus: Experian, Equifax, and TransUnion.
If they do, you should start to see your score improve over time as long as you keep up with your payments. If your payments are ever later than 30 days, that information will also show up on your credit report and likely cause your score to drop.
How to Choose an Online Lender
Choosing the best lender is very specific to the individual, so what’s best for you might not be best for someone else. In addition to comparing the rates and terms to find the best financial option, also take a look at some of these other features to make sure it’s a strong fit.
Funding Time – Each lender guarantees funding over a different period of time. This may or may not be important to you depending on how urgent your financial needs are at the time. If you desperately need a vehicle repair so you can get to work without calling an Uber, then you might prioritize a lender who can get you funded within 24 hours. If you’re ok waiting a few business days, you can widen your search a bit.
Payment Options – Check to see how your potential lender accepts payments. Do they make automatic withdrawals from your checking account? Can you pay online or through a mobile app? If you prefer to pay by check, some lenders charge a fee for that method. Review your options and potential fees to ensure it’s a smooth and convenient process.
Early Payoff Ability – Prepare yourself for an ideal scenario in which you can pay off your bad credit loan early. To make sure it’s feasible, check that your lender allows for that and that there’s no prepayment penalty. Even adding a small extra amount to your principal payment each month can help you save money on interest over the life of the loan.
Availability – Some lenders only operate in certain states. Before you get too far down the rabbit hole, check to see that they are indeed licensed in your area. That way you avoid disappointment after investing your time in research and gathering application materials.
How to Improve Your Credit with an Online Personal Loan
When you choose a personal loan that reports to one or more credit bureaus, you can use the opportunity to rebuild your credit scores. That way, the next time you need any type of financing, you won’t be limited to bad credit products.
In order to do this, take advantage of the opportunity to manage your loan payments responsibly and grow your credit score over time. Here’s how to do it.
Pay On Time Each Month – This is the most important part of your credit history. You’ll see that number begin to increase as you make your monthly payments on time because it signals to lenders that you’re able and willing to meet your financial obligations. Anything over 30 days late is reported to the credit bureau, so keep up with your payments.
Avoid Revolving Credit – One of the credit-related benefits of a personal loan is that this type of debt on your credit report is counted less severely than revolving credit such as credit card debt. By utilizing a personal loan rather than adding more to existing credit card balances, you can improve your credit mix and positively impact your score.
The loans above can all be used as debt consolidation loans to consolidate your high interest rate credit cards into one monthly payment. Debt consolidation will also help your credit utilization ratio which is an important part of your credit score.
Compared to other financial products, personal loans offer a great chance to rebuild your credit while also taking care of unexpected expenses that surprise you in life.
Having poor credit doesn’t mean the door to online loans is completely closed. It just means you may need to try opening a different one. As you can see, there are countless options available that don’t involve using your personal property as collateral or risk the endless debt cycle of payday loans.
Be sure to shop around for the best loan opportunity and read carefully so that you completely understand the terms and conditions of the agreement. Once you do that, you can get the funds you need deposited straight into your bank account using a process that’s convenient and fast.
From there, you can get on the path to rebuilding your credit so that in the future, you’ll have even more options available. Instead of viewing your current credit situation as a complete burden, recognize that it can be a temporary moment in your life. Use the tools around you to meet your needs today while also preparing a better moment for tomorrow.