Key takeaways
- Online lenders, credit unions, and some banks offer personal loans to borrowers with poor credit.
- Lenders who consider bad credit borrowers look at factors beyond your credit score.
- Always compare rates, terms, and fees before accepting a loan to ensure it fits your financial situation and budget.
Personal loans for borrowers with bad credit can be extremely helpful when financial emergencies strike. Most lenders require a minimum credit score of 690 to qualify. Fortunately for anyone whose score falls in the fair or poor categories, there are exceptions to the rule. Certain lenders offer personal loans with no minimum credit score or lenient requirements.
Now, there is no such thing as “guaranteed approval,” but there are lenders who come as close as you can get. These lenders have very flexible criteria and look beyond your credit score. As a result, just about anyone can secure a loan.
Types of urgent loans for bad credit
There are various types of loans that people with low credit scores can qualify for. From secured loans to payday loans online with no credit check, and cash advances, there are plenty of ways to borrow money when you have bad or no credit.
Bad credit personal loans
You can secure personal loans with bad credit. Look for lenders with low credit score requirements or those that place more emphasis on your income than on your rating. Credit unions and online direct lenders for bad credit personal loans often have lenient requirements.
While these loans are easier to qualify for, many have higher interest rates and additional fees. The extra costs offset the lender’s risk. Always compare offers to find the most affordable solution.
Best for: Borrowers who require rapid funding and can meet the qualification requirements.
Secured loans
Secured loans can be easier to qualify for with bad credit, as you need to provide an asset as collateral. The asset could be a car, a house, or even a savings account. Lenders are more inclined to offer these loans to individuals with poor credit because the collateral reduces their risk. In the event of default, the lender can seize the asset to recover the outstanding amount. Secured loans often feature lower interest rates and higher borrowing limits.
Best for: Borrowers who have an asset they can use as collateral.
Joint personal loans
A joint personal loan is when you apply with a co-borrower who has a good credit score or higher income. Having a co-applicant can significantly improve your chances of approval as it lessens the risk for the lender. You are more likely to qualify and receive favorable terms.
The responsibility for repaying the loan is shared between both parties, and both parties’ credit scores will be impacted.
Best for: Borrowers who have a friend or relative with good credit willing to co-sign the loan.
Payday loans
Payday loans are short-term, high-interest loans for individuals with bad credit. They are meant to bridge the gap until your next payday. These loans are for small amounts, usually no more than $500, and have few requirements. Lenders typically do not conduct a credit check. They rely on your next paycheck to verify that you can afford the loan.
While a $500 payday loan guaranteed approval sounds convenient, be cautious. In exchange for not conducting a credit check, lenders charge incredibly high fees. The financing charge for a two-week loan is typically equivalent to a triple-digit APR.
Besides the high fees, payday loans are due in full within two to four weeks. The short term and high costs make them challenging to repay on time. Many people find themselves in a cycle of debt.
Best for: Borrowers who need small amounts of cash quickly and have no other options.
Cash advance apps
Technological advancements have introduced new cash advance apps. These apps provide short-term loans or paycheck advances with minimal fees, no interest, and no credit checks. Cash advance apps rely on your banking history and income rather than your credit score, making them accessible to almost everyone. The amounts are typically small, ranging from $20 to $500 per advance. They are designed to cover short-term needs until your next paycheck.
Best for: Borrowers who need small amounts instantly and can budget for a smaller paycheck.
Payday Alternative Loans (PALs)
Offered by some federal credit unions, payday alternative loans are a more affordable option than payday loans. To qualify, you’ll need to be a member of a federal credit union for at least a month. PALs have a maximum APR of 28%, reasonable fees, and longer repayment terms of up to one year. You can borrow between $200 and $2,000, often without a credit check. PALs are an excellent option if you’re looking to avoid the debt cycle associated with payday loans.
Best for: Borrowers who are members of a federal credit union that offers PALs.
Credit card cash advances
A credit card cash advance allows you to withdraw cash against your card’s line of credit. This instant access to funds comes at a cost. You will pay a higher APR immediately, a cash advance fee, and ATM fees. While not a traditional loan, it’s an instant option if you already possess a credit card.
Best for: Borrowers who have a credit card and can repay the money immediately.
Bank agreements
Some banks offer short-term loans or overdraft agreements for their customers in good standing, even those with less-than-perfect credit. These agreements can provide a safety net, allowing you to overdraw your account up to a certain limit at a relatively low interest rate. Check with your bank to see if they offer such arrangements, as they can be convenient and less costly.
Best for: Borrowers who have a good relationship with their bank.
HELOCs or home equity loans
HELOCs and home equity loans let you borrow against the equity in your house. HELOCs function more like credit cards with variable interest rates, while home equity loans give you a lump sum that you repay in installments. Both have lower interest rates than personal loans since they are secured by your property.
When deciding between a HELOC vs home equity loan, consider how much you need and how the money will be repaid. Home equity loans offer fixed interest rates and predictable payments, making them easier to budget for. HELOCs are a good choice if you are unsure of the final costs of a project and are comfortable with fluctuating interest rates.
Best for: Borrowers who have sufficient equity, a stable income, and are able to repay the loan.
Car title loans
Title loans let you borrow money by using your vehicle’s title as collateral. The lender assesses the car and gives you a loan that is 25% to 50% of its value. There is no credit check, and you often receive the money the same day.
As with other no-credit-check loans, title loans have short repayment terms and high fees. The interest rates can be equivalent to a 300% APR. If you are unable to repay the loan as agreed, the lender may repossess your car.
Best for: Borrowers who own their cars outright and can repay the money fast.
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How to qualify for extremely bad credit loans
Qualifying for a loan depends on multiple factors. Your income, credit score, and debt-to-income (DTI) ratio are the most important. Lenders want to be sure that you can afford to repay the money.
All lenders have different requirements. The basic ones you need to meet are:
- Be at least 18 years old
- Be a U.S. citizen or permanent resident
- Have an active checking account
- Earn a minimum monthly income of at least $800-$1,000 after taxes
- Have a phone number
- Have a valid email address
- Valid government-issued identification
- Minimum credit score
Payday lenders are less interested in your score and more interested in your income. They rely on your next paycheck to guarantee the loan. Some payday lenders require that you be at your job for at least 90 days before you apply.
Many lenders will approve income from sources other than a regular job. You can include Social Security, disability, alimony, child support, and more on your application. Adding additional sources of income can help you secure emergency cash immediately for bad credit.
Derogatory marks that can lead to rejection include bankruptcy, tax liens, foreclosures, and accounts in collections. If you have these on your credit report, it may be beneficial to wait until they are removed before applying.
When you’re ready to apply, prepare the necessary documentation in advance. Fill out your application accurately to speed up the process. While the promise of personal loans for bad credit with guaranteed approval is appealing, always review the terms to ensure you can afford the loan.
Compare interest rates and repayment terms
When searching for emergency loans for bad credit with guaranteed approval, don’t rush. Take the time to compare interest rates and repayment terms to ensure you’re getting the best deal possible. Just because it’s an emergency, you should not take the first option. Failing to compare rates can result in paying significantly more than you should.
Before taking out a loan, understand the full cost and thoroughly research the lenders. The extra legwork can help save you from hidden fees and help you choose a loan that aligns with your budget.
General loan terms
Knowing basic loan terminology helps you fully comprehend what you’re agreeing to.
- Loan amount: The amount of money being borrowed
- Loan period: The length of time during which the loan is active. It can vary depending on the type of loan and the terms of the agreement between the borrower and the lender.
- Amortization: The process of gradually paying off a loan through regular payments that cover both the principal amount and the interest. Over time, the balance decreases until it is fully repaid.
- Repayment term: The period of time in which the borrower is expected to repay the loan, including interest and fees.
- Interest rate: The percentage charged by the lender for borrowing the funds. It determines the cost of borrowing and is typically expressed as an annual percentage rate (APR).
- Collateral: Secured loans require collateral. Collateral is an asset that the borrower pledges to the lender as security for the loan. If the borrower fails to repay as agreed, the lender may seize the collateral to recover the outstanding balance.
- Default: A default occurs when a borrower fails to make payments as agreed upon. It can result in penalties, fees, and damage to the borrower’s credit score.
- Prepayment: Prepayment refers to repaying the money before the scheduled repayment term ends. Some lenders charge prepayment penalties. Others allow borrowers to make extra payments or pay off the loan early without any fees.
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Average personal loan APR by credit score
Interest rates vary depending on your credit score. Generally, the lower your score, the higher your APR. Personal loan interest rates range from 6% to 36%, but can go into the triple digits in states that permit it. It’s a good idea to know the average APR range for your credit score so you have a benchmark for comparing loan offers.
| Credit Score | Average APR | Average loan amount |
| 720+ | 17.18% | $19.911 |
| 680-719 | 28.45% | $15,564 |
| 660-679 | 39.30% | $10,978 |
| 640-659 | 52.85% | $8,463 |
| 620-639 | 79.37% | $6,314 |
| 580-619 | 136.44% | $4,306 |
| 560-579 | 215.73% | $2,755 |
| Less than 560 | 282.71% | $1,883 |
Compare lender APRs
The annual percentage rate (APR) represents the total yearly cost of borrowing, including interest and fees. It is a comprehensive picture of what your loan will cost.
Not all lenders offer the same APRs, even to borrowers with similar credit profiles. Shop around and compare APRs from multiple lenders to find a loan with the most favorable rates.
In general, the lower the APR, the better. The exception is that sometimes a lender will offer a low APR but a long repayment period. If you add up the total cost of the loan, you may find that the loan offer with a higher APR and shorter repayment period is actually cheaper.
Account for fees
Fees can add up and significantly increase the cost of borrowing. When comparing offers, consider these fees in addition to the APR to understand the total potential cost of the loan.
Late payment fees
Lenders charge a fee whenever you miss a payment or make a payment late. The fee is typically 3% to 5% of the overdue monthly payment amount.
Loan origination fee
The origination fee is a processing or administrative fee that lenders stick onto the loan. It is generally 1% to 8% of the total loan amount and will be deducted from the funds before you receive them.
Prepayment penalty
If you repay the loan before the repayment term ends and you may be hit with a penalty. Not all lenders charge this fee, and very few charge it for personal loans.
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Read lender reviews
Lender reputation is paramount. Reading reviews from previous borrowers can provide insight into the lender’s customer service, flexibility, and reliability. Reviews can highlight potential issues or lenders to steer clear of.
Examine repayment terms
Repayment terms dictate the loan’s lifespan and payment frequency. Some lenders offer flexible payment schedules, while others have strict monthly payment requirements.
Your repayment term can significantly affect the total amount you’ll pay back. Short-term installment loans typically have higher monthly payments but lower overall interest rates. Long-term installment loans spread out the payments, potentially making them more manageable but increasing the total interest paid.
Select a loan that suits your budget and payment capabilities. Also, consider if the loan allows for early repayments without penalties, as this can save you on interest over time.
By carefully examining these factors, you can make an informed decision. Aim for a loan that offers a balance between affordable payments, reasonable total cost, and fits your budget.
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Where to find bad credit loans
Lenders that approve borrowers with poor credit scores can be found at various institutions. There are, of course, traditional banks, but an increasing number of lenders have moved online. Do your research to make sure the lender is reputable. Always compare rates from more than one financial institution to find the best deal.
Banks
Traditionally, banks have stringent approval criteria, often sidelining applicants with bad credit. However, some banks have begun offering specialized loan products specifically designed for individuals with poor credit scores. It’s worth inquiring with your bank about borrowing options. Some may provide personalized terms based on your banking history or secured loans with more lenient requirements.
Credit unions
Credit unions are member-owned financial institutions known for their more personalized approach to banking and lending. Many offer special loan products for members, regardless of their credit score. They focus more on their relationship with the institution and their overall financial picture. These loans often come with lower interest rates and more favorable terms than those found elsewhere. Membership in a credit union can be based on your location, employer, or other affiliations. It’s worth exploring the options available to you.
Online lenders
The rise of online lending platforms has dramatically changed the loan landscape. Many of these lenders specialize in lending to individuals with bad credit, making borrowing more accessible. They often use alternative data to evaluate candidates, such as income, employment status, and whether you rent or own. Many offer quick decisions so you can get the money you need fast. These loans often come with higher interest rates and additional fees compared to those from traditional banks and credit unions.
Online marketplaces often provide bad credit loans online. You fill out one application, and the marketplace connects you with direct lenders. These lenders typically offer loans ranging from $100 to $5,000, and many provide funding in as little as 24 hours.
Tips to consider when applying for bad credit loans with guaranteed approval
It is entirely possible to borrow money with bad credit. There are lenders who cater to every demographic. While you can get a loan with a low score, you will end up paying more. It may be worth waiting a few months to work on your credit before taking out a loan. A higher credit score could save you a lot of money.
If it’s time-sensitive and you can’t wait, follow these tips to increase your chances of being approved for a loan.
Check your credit score
You need to know your credit score so that you can determine which lenders you qualify for. There is no point in applying for loans where you don’t meet the basic requirements. First, check your rating, then get your credit reports from AnnualCreditReport.com.
Your credit report is a record of all borrowing data maintained by the three main credit bureaus: Equifax, Experian, and TransUnion. Looking over your reports will help you understand past mistakes (late payments are common) and how you can improve your score (paying on time is the biggest factor).
Seek lenders who consider more than scores
Some lenders place more emphasis on other factors rather than your credit score. They will consider your income, employment history, education level, DTI, and banking history. Targeting these lenders can increase your chances of loan approval.
Prequalify for loans online
Many lenders let you prequalify for loans. Prequalifying allows you to see if you’re eligible and what terms you’re likely to receive without impacting your credit score. The lender will only do a ‘soft inquiry’ during the prequalification process to see a snapshot of your credit history. Only ‘hard inquiries’ lower your score.
Prequalifying is a great way to compare offers so that you only apply for the one with the most favorable terms. However, it does not guarantee approval when you do formally apply. You may also be approved with different rates and terms. To decrease the likelihood of this happening, be completely honest and provide all your financial information on your prequalification application.
Compare loan offers
Don’t settle for the first offer. Comparing multiple loans helps you understand the market and find the best terms and rates for your situation. Compare interest rates, lender fee structures, repayment terms, monthly payments, and any extra features to find the best offer.
Submit an application
Once you’ve chosen a lender, gather all necessary documentation for a smooth application process. You will need government-issued identification, proof of income, and any other requirements specified by the lender.
Submitting a formal application will trigger a hard inquiry, which may temporarily lower your credit score. It should bounce back within a few months and start growing as you make on-time payments.
You may have to wait a few days to find out if you are approved. If you are rejected, the lender must send an Adverse Notification Letter. The notice will tell you what factors contributed to your denial.
Review the letter and take steps to address the issues before you apply again.
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Alternatives to bad credit loans
Loans for borrowers with bad credit often have high interest rates. If you want to avoid paying high rates, you may ask Can I cancel my 401k and cash out while still employed? You may be able to, but it’s rarely the best first option. Consider these alternatives instead:
A 401(k) loan allows you to borrow money from your retirement account without having to cash out. The interest rates are lower, but you may face tax penalties.
Employer paycheck advances provide you with part of your earned wages early, often with minimal to no fees. The money is deducted from your next paycheck.
Borrowing from family or friends often comes with no interest and flexible repayment. Just be sure to set clear terms to avoid misunderstandings.
Buy now, pay later apps are a way to split purchases into manageable installments. You can use them to purchase necessary items and free up cash.
Local charities and nonprofit organizations can help cover rent, utilities, and other essential expenses, such as groceries. Call 211 to find organizations in your area.
Frequently asked questions
1. What’s the easiest loan to get with poor credit?
The easiest loans to get with poor credit are payday loans or paycheck advances, since they do not require a credit check. Many online lenders offer unsecured personal loans to borrowers with poor credit scores. They have lower credit score requirements and consider other factors as well.
2. Is lending for bad credit legit?
Legitimate lenders offer loans to individuals with bad credit. Verify that the lender has a decent reputation, is registered and licensed to conduct business in your state, and maintains a secure website.
3. Which type of loan does not require a credit check?
Payday loans and credit card cash advances can be considered bad credit personal loans guaranteed approval no credit check, due to their extremely lenient requirements. Payday loans do not conduct a credit check; instead, they ask for income verification to secure the loan. Credit card cash advances let you take out cash using your credit line that you’ve already been approved for. Both types of no-credit-check loans come with high-interest rates and fees, making them costly options.
4. Can I get a loan with a 500 credit score?
You can get a loan with a 500 credit score, though your options will be limited. Look for online lenders or credit unions that specialize in lending to people with poor credit. Some lenders offer emergency loans for 500 credit score borrowers, often with higher interest rates and stricter terms. Always compare offers to find the most affordable option.
5. How quickly can I expect to receive the funds if I’m approved for a loan with guaranteed approval?
The speed at which you receive your funds depends on the lender. Many lenders specialize in rapid processing, meaning you could receive the money in your bank account as soon as the next business day. At most, it should take three business days to be able to access your funds.
6. How to spot scams for bad credit loans?
Watch out for lenders that guarantee approval without checking your credit or income, or offers that are too good to be true. Be wary of upfront fees, pressure to act quickly, or requests for payment via gift cards or wire transfers. Legitimate lenders are transparent about terms and never ask for payment before approval. Always research the lender and ensure they are licensed to operate in your state.
Bottom line
Regardless of your situation, you can find a loan. Consider loan marketplaces and online lenders, visit your local credit union, or talk to your bank. Plenty of financial institutions offer loans to borrowers with poor credit scores. You may be asked to pay higher interest rates and additional fees, but there are reputable lenders who can assist you. Repay the loan responsibly and you’ll improve your credit score. A higher credit score will make it easier and cheaper to borrow money in the future.
