Best Bad Credit Personal Loans: Top Loan Options for 2024

Even if you have bad credit (credit score below 580), there are personal loan options available for you. You can use the funds for debt consolidation, medical expenses, home improvement, car repairs, or any other purpose. 

Those lenders that do offer bad credit personal loans tend to have flexible eligibility requirements. While these loans can be convenient, it’s important to consider the total cost of borrowing to ensure you’ll be able to repay the new loan.

Can You Get a Personal Loan With Bad Credit?

Minimum credit score requirements vary by lender, and most lenders require a credit score of at least 580. If you’re wondering, “Can I get a personal loan with bad credit?” the short answer is yes.

Consider working with online lenders with borrowers with thin or bad credit histories. Some lenders also offer no-credit-check loans, which require only a soft credit pull and rely on factors like employment status and income to qualify borrowers.

5 Lenders That Offer Bad Credit Personal Loans 

If you’re wondering how to get a small loan with bad credit, there are many options available. We recommend comparing several options to find the best personal loans for bad credit for your financial situation.

To make the process easier, we reviewed 20 personal loan lenders based on the loan amounts they offer, APRs, repayment terms, eligibility requirements, and customer reviews to determine our top five recommendations. We also list the type of lenders you’re likely to qualify with below.

Online Lenders

Personal loans for bad credit online are usually easy to qualify for and offer quick funding. If you’re applying for emergency personal loans for bad credit, you’ll typically receive a decision within minutes of submitting the online application. Many lenders also offer same-day funding.

Credit Unions

Credit unions rely on your banking and borrowing history as a member to qualify you for a loan. If your accounts are in good standing, you may be able to qualify for personal loans with bad credit. With annual percentage rates (APRs) capped at 18%, this can be a cost-effective option.

Direct Lenders

Direct lenders refer to financial institutions that offer loan products to consumers. This means that you won’t have to go through another institution and will have a single point of contact throughout the loan process. Loans from direct lenders are typically quicker to fund.

Bad Credit Personal Loans vs. Traditional Personal Loans

If you don’t have a credit score of at least 580, you may find it difficult to qualify for traditional personal loans. Traditional financial institutions have stricter eligibility requirements, but they also offer better loan rates and terms.

Bad credit personal loans are specifically tailored to match the needs of borrowers with poor credit. They’re typically offered by online lenders and credit unions. Traditional personal loans can be borrowed from banks as well as credit unions and online lenders.

What To Know Before Applying for a Bad Credit Personal Loan

Before you apply for personal loans for bad credit with instant approval, it’s important to know that these loans will cost you more to compensate the lender for the risk. When comparing loan options, here are a few things to keep in mind.

Interest Rates

The interest rate you’ll pay on the loan can make it more expensive. For example, borrowers with good credit (690-719) usually qualify for an estimated APR of 15.86%. In comparison, bad credit borrowers (300-629) qualify for an estimated APR of 21.14%.

This means that for a $1,000 loan with a 12-month term, your monthly payment will be $90.66 if you have good credit. The total interest you’ll pay over the term will be $87.98. If you have bad credit, your monthly payment will be $93.18, and the total interest over the loan term will be $118.17 for the same loan amount and repayment term.

Lenders may also charge other fees, such as origination fees, prepayment penalties, and late fees, which may drive up the cost of the loan.

“Taking out a loan when you have bad credit comes with a very high interest rate,” cautions Teresa Dodson, a debt expert and the founder of Greenbacks Consulting. “This typically means a big monthly payment. If the plan is to rebuild credit, make the loan amount small and the terms short. Never commit to more than you can afford,” Dodson suggests. 

Repayment Terms

The repayment term is the time frame within which you have to repay the loan in full. The longer your repayment period, the smaller your loan payment will be, as seen in the example below. However, it’ll also cost you more in total interest over the life of the loan.

For example, if you borrow $1,000 at an interest rate of 21.14% for a term of 12 months, your monthly installment will be $93.18 and the total interest over the loan term will be $118.17. 

However, if you borrow the same loan amount for a term of 24 months, your monthly installment will be $51.45, but the total interest you’ll pay over the loan term will be $234.91.

Loan Amounts

Each lender has its minimum and maximum loan amount thresholds, usually ranging from a few hundred dollars to $50,000. The exact amount you qualify for will depend on a number of factors, such as your credit history, income, and debts. Typically, bad credit personal loans are for smaller loan amounts.

Popular Options of Bad Credit Personal Loans 

There are several different types of loans you may qualify for, even with a low credit score. Compare these options to determine which one aligns with your financial needs.

Guaranteed Approval

Online loans for bad credit with guaranteed approval refer to loans with very low minimum credit score requirements. Loans that require no credit checks are also referred to as guaranteed loans since it’s easy to qualify for them.

It’s important to note that lenders can’t “guarantee” approval on installment loans. They’ll still evaluate your loan application based on a number of other factors, such as your employment status, income, and debt-to-income ratio.

Instant Approval

Instant approval loans for bad credit are a good option when you need quick access to funds. The loan application process is usually done online, and you’ll receive instant approval. Once you receive a loan approval, the funds will usually be transferred to your bank account within one business day.

Secured Personal Loans

Secured loans for bad credit are best for borrowers who can offer collateral, such as a vehicle, an investment, or a savings account. With a secured loan, you can qualify for lower interest rates. However, the lender can confiscate the collateral if you default on the loan to recover the money.

Unsecured Personal Loans

Unsecured loans for bad credit don’t require collateral. Instead, lenders will rely on your debts, income, and credit history to determine your creditworthiness. The lender can’t seize your assets if you default on a bad credit loan. However, you’ll likely pay high interest rates on these loans compared to secured loans.

Personal Loans With a Cosigner

If you have a friend or family member with good or excellent credit, it may be a good idea to apply with a cosigner. This will make it easier for you to qualify for a loan and secure lower rates. It’s important to remember that lenders can collect from the cosigner if you don’t make payments on the loan.

See if You Qualify for a Bad Credit Personal Loan Today

Qualifying for a personal loan with bad credit is challenging but not impossible. You’ll have fewer options to select from, and the terms may not be as favorable, so it’s important to carefully compare your loan offers. Prequalify with at least three lenders before you select one that fits your needs.

If you can, work on improving your credit before you apply for a loan. Pay all your bills on time to improve your payment history, set up autopay to avoid late payment fees, improve your credit utilization by keeping credit card balances below 30%, and pay down your debts. This will help you qualify for better loan terms in the future.