Unsecured loans can be a helpful option if you have bad credit and need funds without putting down any personal assets as collateral. When applying for an unsecured personal loan with a low credit score, expect higher interest rates and potentially shorter repayment terms.
Lenders typically charge these higher rates because there’s more risk involved when they lend without any collateral. These loans can still be manageable if you review the terms carefully and plan out your repayment.
Since unsecured loans don’t require you to use your car, home, or other property as backing, they offer a simpler path to getting funds for emergencies or unexpected expenses. However, it’s essential to weigh the cost of higher interest rates against your ability to repay on time. By understanding what you’re signing up for, you can make informed choices that help you cover your immediate needs while managing debt responsibly.
Best Online Installment Loans for Bad Credit
Installment loans offer the flexibility to borrow more with manageable payments over time. While lenders consider credit score, they often focus on your monthly income to ensure you can handle the payments. Generally, the higher the loan amount, the longer the repayment period—and while this lowers monthly costs, it also means more interest paid over time.
If you need more than a few hundred dollars, installment loans can be a useful option. Many lenders report payment activity to at least one credit bureau, so timely payments can help improve your credit score as well.
Here are two installment lenders and marketplaces designed specifically for borrowers with bad credit.
CashUSA
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. This platform caters to a diverse range of credit profiles, making it more than just a broker for those with poor credit.
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.
PersonalLoans.com
Features & Benefits
- Multiple loan types available
- Fast loan decision
- Funds deposited as soon as you accept an offer
- Nationwide availability
PersonalLoans.com offers access to multiple loan types through a network of lenders, catering to individuals with credit scores as low as 600. Each lender provides unique rates, allowing you to choose the best offer for your needs.
The online application process is quick and easy, taking just minutes to complete. You’ll receive a decision within one business day, and approved funds can be deposited shortly after you accept an offer.
Best Online Short-Term Loans for Bad Credit
If you’re looking for a small loan—anywhere from a few hundred to a few thousand dollars—a short-term loan might be the right fit. Repayment periods can range from a few weeks to several months, depending on the lender.
Unlike payday or title loans, which require collateral, these unsecured short-term loans don’t put your assets at risk. Using a loan marketplace can also save time, allowing you to receive multiple offers through a single application, which boosts your chances of finding the right loan.
Here are two loan marketplaces offering short-term personal loans for borrowers with bad credit.
MoneyMutual
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.
BadCreditLoans.com
Features & Benefits
- No cost 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
Bad Credit Loans is an online lender marketplace that allows you to connect with multiple lenders by filling out a single application. The service is 100% free.
Once you’re approved, your lender will provide you with the APR, loan fees, and other terms.
Read through the terms, compare all the offers you’ve received, and only accept the loan you’re most comfortable with. You are not obligated to accept the personal loan from any lenders that you are matched with.
How to Choose the Best Loan for Bad Credit
Finding a loan with bad credit can feel challenging, but knowing what to look for makes all the difference. Here’s what to focus on when comparing lenders to find an option that fits your needs and budget.
- APR and interest rates: The annual percentage rate (APR) directly impacts the total cost of your loan. Look for the lowest APR available to you, as this rate reflects both the interest and any fees over the life of the loan. Even a small difference in APR can save you money in the long run.
- Fees and additional costs: Some lenders charge fees like origination fees, late fees, or prepayment penalties. Origination fees are often deducted from your loan amount upfront, while late fees are applied if you miss a payment. Prepayment penalties might kick in if you pay off your loan early, which isn’t ideal if you want the flexibility to pay it off faster.
- Loan terms and repayment flexibility: Loan terms typically range from a few months to several years, and choosing the right term can make your payments more manageable. A shorter term usually means higher monthly payments but lower total interest costs. A longer term may lower your payments but can lead to paying more in interest overall.
- Lender reputation and reviews: Choose a lender with a good track record for customer service and transparent practices. Checking online reviews and consumer reports can give you insight into others’ experiences with a lender, which can help you avoid potential issues.
- Approval speed and funding time: If you need funds quickly, pay attention to the lender’s approval and funding time. Many online lenders offer pre-qualification within minutes and can fund loans within one business day, but it varies. Knowing the timeline can help you plan for any urgent expenses.
By focusing on these key areas, you can compare lenders with confidence, picking an option that not only covers your immediate needs but also fits your financial goals.
Alternatives to Unsecured Loans
If an unsecured loan isn’t the best fit due to high interest rates or strict approval requirements, other options might work better for you. Here are a few alternatives that may offer more manageable terms or improve your chances of approval.
- Secured loans: A secured loan requires collateral, like a car or savings account, which can make approval easier even with bad credit. Since the lender has something to fall back on, secured loans often come with lower interest rates. But remember, if you can’t repay, the lender can claim your collateral to cover the debt.
- Credit builder loans: These loans are specifically designed to help you build or repair credit. Instead of receiving the funds upfront, you make monthly payments into a savings account that you can access once the loan term ends. As long as payments are on time, a credit builder loan can boost your credit score, giving you a better foundation for future borrowing.
- Peer-to-peer lending: Peer-to-peer (P2P) lending platforms connect you with individual investors who fund loans, often with more flexible terms than traditional banks. Some P2P lenders have options for borrowers with lower credit scores and may be willing to look beyond your credit history to factors like income or education.
- Credit union loans: Credit unions are known for being more flexible with lending criteria compared to banks. They may consider factors beyond credit scores, making it easier to qualify if you have a lower score. Additionally, credit unions often offer competitive interest rates and fees, as they’re member-focused institutions.
- Family or friend loans: Borrowing from a trusted friend or family member can be an option if formal loans don’t work. Just be sure to set clear terms and agree on a repayment schedule to keep things smooth.
Each alternative comes with its own set of benefits and drawbacks, so consider what works best for your situation. By exploring different loan types, you can find a borrowing solution that aligns with your financial goals and repayment comfort level.
Final Thoughts
When choosing a loan with bad credit, the right fit isn’t just about the terms—it’s about what makes sense for your current needs and long-term financial health. Taking the time to compare options, whether unsecured, secured, or alternative loans, allows you to make an informed decision that aligns with your budget and goals.
Remember, borrowing responsibly can be an opportunity to improve your credit over time. By staying on top of payments and choosing the loan that best fits your ability to repay, you can meet your immediate financial needs while setting yourself up for a stronger financial future.
