There are several reasons you may find yourself needing a small loan. Quite often this happens due to an unexpected expense. Perhaps you have a broken water heater or an unexpected issue with your car.
Whatever the case may be, if you don’t have much in savings, you may be worried that you won’t be able to pay for it – especially if you have bad credit. Not to worry, though. Even if you have bad credit history, you have several options.
Let’s review some of them.
Loan AmountUp to $5,000
Features & Benefits
- Application takes less than 5 minutes
- Get a decision on your loan within minutes
- Funds are available within 24 hours
- Trusted by more than 2,000,000 borrowers
MoneyMutual is an online marketplace of lenders. They make it quick and easy to find a short term cash advance loan in as little as 24 hours.
One application can potentially get you multiple loan offers. MoneyMutual has been trusted by more than two million customers. They serve borrowers with bad credit from all 50 states except New York and Connecticut.
Features & Benefits
- Flexible borrower requirements
- Loan request can be approved within minutes
- Money deposited as early as 1 business day
- All credit types accepted
CashUSA connects borrowers with lenders. Each application is sent to the lender most likely to lend to the borrower. Because it works with a variety of credit profiles, it is not only a poor credit loan broker.
Interest rates vary depending on the lender, so make sure you read through the terms for each emergency loan before you choose. Applying online only takes a few minutes, and funds are often available the next day.
Loan Amount$1,000 – $35,000
Loan Term3 to 72 months
Features & Benefits
- Multiple loan types available
- Fast loan decision
- Funds deposited as soon as you accept an offer
- Nationwide availability
You can get a loan through PersonalLoans.com with credit scores as low as 600. Each lender in their network offers its own unique interest rates.
The quick and easy online application only takes minutes. You’ll have a decision within a business day of submission.
Loan Amount$200 to $10,000
Loan Term7 days to 12 months
Features & Benefits
- Response by email or phone within minutes of submitting request
- Money deposited as soon as next business day
- High approval rate even with bad credit
- Trusted since 1997
CashAdvance.com provides a free service that quickly connects customers with lenders that offer short-term loans that may work for them.
Whether you have an emergency situation or an unexpected expense, may be able to help you out quickly.
Secured Loans vs. Unsecured Loans
Before looking at the particular types of loans, we should establish the difference between secured and unsecured loans.
The difference is simple: with a secured loan, you offer one of your assets as collateral in exchange for the loan. In many cases, this will be a car or a truck. If you are unable to repay the loan, the creditor has the open of repossessing the asset you put up and sell it to recoup some or all of the losses.
This can be a good way to get approved for a loan when you otherwise wouldn’t be. However, it can be a risky proposition, particularly if you aren’t confident in your ability to repay the loan.
Local Credit Union
Your local credit union is potentially the best option if you need a small loan. Credit unions often have some of the best rates and loan terms. They may have multiple loan types to suit your needs as well.
However, each credit union will vary widely not only in terms of rates but also in terms of which borrowers they will be willing to lend to. As usual, the rates the credit union offers you will be affected by your credit scores. If your credit scores are especially low, they may not be willing to lend to you at all.
Regardless, this is an option you should consider before other alternatives. Be sure to check the personal loan options your local credit union offers.
Title loans are the one secured loan you will find on this list. As its name implies, with a title loan, you provide the title to a vehicle or other asset in exchange for a loan.
While this may not sound ideal, a secured loan may increase your approval chances, especially if you have poor credit.
These loans have an average interest rate of 300%, which is quite high. Loan amounts vary widely, ranging from $100 to $5,5000.
Due to these high interest rates and the risk of having your vehicle repossessed, you should explore other options on this list first, such as a loan from your credit union or installment loans.
Bad Credit Loans Online
If you have bad credit, you might think you will never be able to get a loan. But while having a low credit score may make things more difficult, it doesn’t mean you won’t be able to get a loan at all.
To give you an idea, here are the requirements that CashAdvance.com lists:
- Be at least 18 years of age.
- Be a U.S. citizen.
- Have a current job, with an after-tax income of $1,000 per month.
- Allow for your employment to be verified.
- Have a valid checking account.
- Have a valid home and work telephone number, as well as a valid email address.
As you probably noticed, there is no mention of credit score. There is no mention of behavior that lowers your credit score – late payments, bankruptcy, and so on.
CashAdvance does say that meeting these requirements doesn’t guarantee approval, and this makes sense because they are not a lender.
And some lenders do require a certain credit score. Nevertheless, if you meet these basic requirements, there is a chance you could get approval.
Here are some other things you can do:
Have Regular Income
Creditors will like to see that you have a stable income history. This is especially important with payday loans but will be helpful with any type of loan.
Having a stable income history will help demonstrate your ability to repay the loan. Without income history, the lender may worry you won’t be able to repay it.
The type of employment is not necessarily important; as long as you have income coming in regularly, that will increase the lender’s confidence in you.
Improve Your Credit Score
Although you are presumably here because you have bad credit, the reality is that you can always improve your credit score. Even if it looks bad right now, there’s no credit score that can’t be fixed.
The best thing you can do for your credit score is to simply make payments. Making payments on your credit cards and other forms of credit reduces your credit utilization. The general rule is that you should keep your utilization under 30%. This means that if you total available credit is $10,000, you should have no more than $3,000 of outstanding credit.
In addition, you should try to avoid late payments. If need be, set calendar reminders – but having past due payments is one of the biggest drags on your credit score.
Installment Loans for Bad Credit
As its name implies, installment loans are paid in several installments. This is in contrast to payday loans, which typically must be paid in full on or before your next paycheck.
Because installments loans work on a payment plan, you can bower much larger amounts. On personal loan network, PersonalLoans.com, offers personal installment loans up to $35,000.
They also require you have to have a credit score of at least 580, which is a fairly low threshold. APR on these personal loans ranges from 5.99% to 35.99%.
What to Do If You Are Denied for a Small Loan
If you don’t have great credit, there is no guarantee you will be approved for a small loan. Even if the creditor is used to working with clients like you, they may have a variety of criteria that could disqualify you.
If you are denied, don’t take it personally. Instead, focus on what you can do in response. You likely still have options.
Shop Around For Small Loans
Every lender is different. That means that each lender will have their own unique criteria when determining whether to grant you a loan. So even if one lender says no, you may be able to get approval elsewhere.
Shopping online makes it especially easy to cover all the bases. Sites such as CashUSA and MoneyMutual allow you to quickly and easily see a list of a number of different lenders. You can then contact each one and see if they will approve you.
One final note on this: even you are approved, you can still continue shopping around, depending on the loan. If you aren’t satisfied with the interest rate, for example, there could be another lender who will have better terms.
How to Use Your Small Loan for Bad Credit
Remember that while small loans can protect you from the brink of financial disaster, you should also use them responsibly. Because your credit score is already not the best, you don’t want to put yourself in a position where most creditors will deny you.
You may always be able to find someone who will give you a cash advance, but remember that these small loans should only be used as a last resort. Sometimes referred to as predatory lending, these loans are designed to keep you in debt.
Instead, you should work with your credit union or work with an installment loan. Pay these loans back on-time and in full and can actually improve your credit. At the same time, you will be able to keep the lights on.
And that’s a win everyone can appreciate.