Millions of Americans end up overpaying on bad credit loans every day. Payday loans and auto title loans are 10 – 50 times more expensive than personal loans! The average payday loan APR is 400%!!! Stay away from them!
But what if you are with bad credit? Can you qualify for a personal loan? Yes! Stay with us. We have something for you! In 2022, qualifying for a cheap personal loan with bad credit is possible. Personal loan rates for bad credit vary between 15% to 35.99%, which is times cheaper than traditional payday loans! First of all, watch our video that shows how people with bad credit can get a personal loan.
Best Personal Loans for Bad Credit 2022: Key Findings
Personal loans for bad credit range from 15% to 35.99%.
Personal loans vary between $100 to $100,000.
People with bad credit can get a personal loan.
Payday loans average at 400% APR. People with bad credit who can’t qualify for a personal loan have many options than payday loans.
Types of loans available for people with bad credit:
Personal loans for bad credit. These range from 15% to 35.99%.
Alternative payday loans. These range from 35.99% to 400%.
Secured personal loans.
Loans from credit unions. Credit unions offer loans, capped at 18% for people with bad credit.
PALs. These are quick cash alternative options from credit union payday loans that are capped at 28%. PALI: up to $1,000; 1 – 6 months repayment. PAL II: up to $2,000, 1 – 12 month repayments; not requires to be a member for at least a month.
Credit cards for bad credit.
Credit card cash advances.
Cash advance apps. $100 to $1,000, interest-free cash. Fast approval without a credit check.
Buy Now Pay Later companies. Buy stuff and pay for it later.
All personal loan companies that we list below work with people with bad credit. They are licensed, legitimate, and do NOT perform a hard inquiry on your credit file, which means you can shop around without worrying that your credit score will be affected! Here are the best of them. If you want to find all of them, visit our marketplace:
But What If I Don’t Qualify for None of The Companies Above?
If you can’t qualify for any of the loans listed above, you can do more things.
1 Try Alternative Payday Loans
I know, I know. Just seeing the term ‘payday’ is enough to make you cringe. Alternative payday loans are totally different from payday loans. In fact, they have been created exactly to help people avoid payday loans. They are much cheaper than payday loans and are accessible to borrowers with very bad credit.
To find the latest alternative loans, you can go to Google and search for :
Here is the list of all legit bad credit lenders. If you can’t get a loan from the companies listed above, then there are more options. Some can be more expensive than traditional bad credit loans, but they are cheaper than payday loans and auto title loans.
When we talk about bad credit loans, BadCreditLoans.com should always be at the top of our list! And there is a good reason for that. BadCreditLoans.com has helped millions of people get a personal loan, while many still pay insane interest rates on payday loans. BadCreditLoans.com is a leading company helping people with really bad credit. They are NOT a payday loan company! They are a huge marketplace connecting people with bad credit with lenders offering UNSECURED bad credit loans. The company offers loans of $500 to $10,000, APR 5.99% to 35.99%. And bad credit is always approved … in less than a day. In fact, this is the most successful personal loan company for bad credit that we at ElitePersonalFinance know. Whether you want to get a bad credit loan or refinance your existing payday loans with one cheaper loan, try BadCreditLoans.com.
The Best in The Bad Credit Business!
Easy and fast approval.
Those with really bad credit get approved.
APRs in the personal loan range, which means less than 5.99% to 35.99%.
Not a payday loan company.
Amount of up to $10,000.
Huge lending network.
Free to register and no obligation to accept any offer.
The minimum credit score required is 0.
No hard inquiry on your credit score, so registering won’t lower your credit score.
For those with really bad credit, expect high APRs ranging from 15% to 35.99%.
People with really bad credit can’t qualify for the highest amount of $10,000. They can expect up to $3,000.
We recommend alternative payday loans for those with really bad credit who can’t qualify for a personal loan. These companies are more expensive than personal loans but much better than payday loans. The company offers loan amounts ranging from $500 to $4,000, with APRs ranging from 59% to160%. Loan duration range from 9 to 18 months, and OppLoans charges zero prepayment penalties. Their loans are unsecured – which means no upfront collateral is required – and as you continue to make on-time payments, you build your credit score in the process. Moreover, if your loan is approved, you can receive funds in as little as one business day.
Easy approval process.
Those with very bad credit can still get approved.
OppLoans offers installment loans and lines of credit.
OppLoans does not check your credit score but will assess your financial transaction history.
Loans are unsecured and do not require any collateral.
There are no prepayment penalties.
OppLoans offers refinancing options to select borrowers.
Alternative loan sites like OppLoans have lower APRs than payday or car title loans.
APRs are high, ranging from 59% to 160%.
Loan origination fees range from 0% to 3%, and other fees can apply.
Designed specifically for those with bad credit, CashUSA offers installment secured personal loans for people with bad credit. APRs range from 5.99% to 35.99%, but even if you have bad credit, putting collateral to your loan can lower the APR as low as 10%. CashUSA offers loans up to $10,000, but – according to their website – the amount can be increased under certain conditions. But remember, if you fall behind on your payments, there is a chance you could lose your car. We only recommend secured loans if you’re sure you can repay the debt on time and in full.
Those with really bad credit can still be approved.
The company applies personal loan APRs, ranging from 5.99% to 35.99%.
People with bad credit get as low as 10% APR.
Borrowing amounts can exceed $10,000, but you have to speak with them directly.
Secured loans put you at risk of losing your collateral.
Bad credit means a higher APR, although it’s still much lower than a traditional car title loan.
With over 10 billion in loans provided, LendingTree is one of the largest online personal loan companies in the marketplace today! Since LendingTree offers unsecured loans to borrowers with credit scores as low as 500, it’s a great place to apply if you have extremely bad credit. You can borrow up to $50,000, but the amount you receive will be less if your credit is poor. As well, its APRs range from 3.99% to 35.99%, but if you have bad credit, expect an APR near the top-end of the range.
As one of the largest online loan companies, LendingTree is a name you can trust.
APRs range from 3.99% to 35.99%.
Low credit score requirements (500 minimum).
1-day approval process.
Some people with terrible credit won’t be approved.
PersonalLoans offers unsecured loans ranging from $1,000 to $35,000, and because the company only requires a minimum credit score of 580, PersonalLoans is a great place to obtain a bad credit loan. Their APRs range from 5.99% to 35.99%, but you need to have some form of recurring income to qualify. It can be full-time employment, self-employment, regular disability, or Social Security benefits. Keep in mind that their loans are not available to Arkansas, Georgia, or New York residents.
Low credit score requirements of 580.
A low-income requirement of $1,000.
Bad credit is ok.
The highest amount allowed is $35,000.
Available in many states.
People with really bad credit can’t apply.
You can’t have an account with a late payment for longer than 60 days or a recent bankruptcy.
You can’t have any recent charge-offs or late payments.
Best for: Bad Credit
Upgrade Disclaimer: Personal loans made through Upgrade feature APRs of 5.94% – 35.97%. All personal loans have a 2.9% to 8% origination fee, which is deducted from the loan proceeds. The lowest rates require Autopay and directly pay off a portion of existing debt. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower, and your loan offers may not have multiple term lengths available. The actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges may increase the cost of your fixed-rate loan. There is no fee or penalty for repaying a loan early. Upgrade’s lending partners issue personal loans. Information on Upgrade’s lending partners can be found at https://www.upgrade.com/lending-partners/.
The Complete Guide on Getting a Personal Loans with Bad Credit 2022
You’ve heard that knowledge is power!
And, when it comes to getting a bad credit loan, it couldn’t be more true. With so many lenders out there and thousands of products to choose from, people often get confused, making mistakes. Huge mistakes cost them a lot of money and put them in a bad financial situation in time!
ElitePersonalFinance has researched the bad credit lending market in full and created this comprehensive guide for you! We have reviewed all of the big bad credit lenders in America. We talk to many bad credit customers, we have read and extracted all of the information in this business to complete this guide. Now you have all of the information in this article.
So, if you are with bad credit and are looking for a loan, stay with us!
If you are looking for a loan and have bad credit, try to avoid getting a loan at all. Bad credit loans are always more expensive because lenders don’t trust you. Wait and try all of your options. Ask someone for money, ask for a cash advance from your workplace, stuck your budget, etc. Meanwhile, start working on your credit score and when it increases, go and get a cheap personal loan (people with good credit scores pay times less).
If none of these work, only then apply for a loan.
Avoid payday loans and auto title loans! They are predatory and often lead people to the debt cycle and serious financial consequences.
Payday loans APR average at 400%, auto title loan APR average at 300%. That is very expensive!
You’ll encounter many manipulative lenders who try and market destructive products to help your financial situation when you are with bad credit. Payday lenders try to convince you that you have no other options than them because of your bad credit.
And … they succeed. People with bad credit and bad financial situations often get manipulated successfully. They get these loans, and some of them, unfortunately, end up bad.
It’s a terrible practice, and we see it all the time.
Also, block out the noise and avoid unreliable recommendations by unqualified bloggers offering you such products. Many of them don’t have the financial knowledge needed to provide reliable loan advice.
The bottom line is that many options are available for those with bad credit than payday loans and auto title loans.
There aren’t super cheap loans for people with bad credit, but for sure, you won’t be paying this insane 400%.
It’s 2022! There are so many loan companies offering cash to those with bad credit. Even, there are so many new types of lending companies. We are talking of totally new types of businesses. We’d bet that most of you even haven’t heard of them. And we will show you all of them below.
We will show you all of them below!
But before we move on, let’s only mention a few words on the bad lending market and how it change in 2022. This will help you understand things in detail.
The Truth About The Bad Credit Lending Market in 2022?
Only a few years ago, things were like there were only personal loans and payday loans. Personal lenders had strict and high approval criteria. Only a few points of your credit score could be the reason for serious borrowers to be denied the personal loan and sent to unscrupulous predatory lenders.
In 2022, the bad credit loan market is totally different. Now people can easily get an installment personal loan, even with bad credit! Here are the main changes.
Personal lenders now approve people with bad credit
Many online bad credit personal lenders entered the stage. The competition between them makes them offer competitive terms for people with bad credit.
If you applied in the past and were denied, don’t give up. It’s a different world now. As the market continues to evolve, more and more lenders are now offering online personal loans to all credit score borrowers. As more companies enter the marketplace over time, competition increases. The increased competition forced lenders to decrease their minimum credit score requirements to generate more revenue and remain in the business. For us, this means higher approval rates, higher loan amounts, and better loan terms for those with bad credit. And this trend is constantly growing!
New types of lenders
As a result, also totally new types of loan companies have entered the stage. Have you heard of loan apps, Buy Now Pay Later, alternative payday loans, many new and improved loan comparison sites, etc.? Some of you probably would answer “yes,” others “no.” But even to those that will answer with “yes” now, we’d bet that they wouldn’t be answered with “yes” a few years ago.
Significant changes in the approval criteria
The approval criteria that lenders use now are different.
Before, lenders mainly relied on your credit score. It’s a different world now.
Instead of analyzing just your credit score, in 2022, personal loan lenders now look at many additional factors like your income, debt to income ratio, workplace, working history, cash flow, education, spending activities, savings balance, etc.
A quick example is credit unions. Because of their flexibility, many people with bad credit can get approved on very cheap personal loans. There, a loan officer will talk to you and will discuss many factors beyond your credit score.
Another thing that lenders have been forced to make changes in their overall terms is being more competitive and staying in business.
This leads cad credit lenders to start offering higher loan amounts, lower APRs, flexible terms, longer installment periods, fasted and easier approval, flexible refinancing options, less or no late fees, and better overall terms. More importantly, loan contracts have become much more transparent – leading to less or oftentimes no hidden fees, which is not a bad thing at all.
What Types of Loans are Available for People with Bad Credit?
As you conduct your search, you’ll find plenty of options to choose from. But like many financial products, loans are filled with complicated terms that are new or unfamiliar to many borrowers. But don’t worry, before you shop around, we’ll get you up to speed.
Unsecured Personal Loans
15% – 39.99%
< $1,000 – $5,000
Secured Personal Loans
10% – 20%
< $1,000 – $10,000
10% – 20%
< $1,000 – $10,000
18% – 28%
< $1,000 – $5,000
Alternative Payday Loans
35.99% – 400%
<$1,000 – $5,000
20% – 30%
$300 – $5,000
Cash Advance Apps
5.99% – 67%
$50 – $35,000
Credit Cards for Bad Credit
20% – 35%
$300 – $5,000
20% – 30%
$35.000 – $65,000
Car Title Loans
$1,000 – $10,000
Payday Advance Apps
Note: Although many loans are available to those with bad credit, the main types are: unsecured personal loans, secured personal loans, co-signer loans, alternative payday loans, and credit unions. The other types are considered loan variations.
Unsecured Personal Loans for Bad Credit
Even if you have bad credit, an unsecured online loan should always be your first destination. The term ‘unsecured’ means you are not required to put up any collateral or add a cosigner, so you never have to worry about losing your property or put your friendship with that person at risk.
What are unsecured personal installment loans?
These are installment types of loans, in most cases with fixed rates. Their APR range from 5.99% to 35.99%, the loan amount ranges from $1,000 to $100,000, but typically, the is capped at $30,000 to $50,000. Repayment terms range from a few months to up to 10 years.
But what about bad credit?
A few years ago, getting a personal installment loan with bad credit was almost impossible. Fortunately, the things in this business changed dramatically.
Now people with bad credit can get personal installment loans!
There are many personal loan companies that work with people with bad credit.
What APR should people with bad credit expect?
No one can tell you exactly what offers you will receive before applying. But on average, people with low credit get loans with APR, averaging 15% to 35.99%. That’s not too cheap compared to the lowest rate of 5.99%, but things make sense compared to the average payday loan APR of 400%.
Note! Personal loan APR can’t exceed 35.99%. If a company offers you loans with an APR of over 35.99%, this can’t be categorized as a personal loan, even if it meets the legal state regulations laws! This is a standard that all legitimate companies use.
How many people with bad credit should expect?
Although we have mentioned that personal loans are up to $100,000, people with bad credit can’t expect that much. Your bad credit means increased risk for your lenders, and the chance to get a high-amount loan amount is very low.
Actually, your loan amount approved is more related to your income and debt to income ratio instead of your credit score. In other words, lenders try to evaluate how much you actually have the ability to pay.
For example, if you make $1,000 a month, no lender will approve you on loan, costing you over $1,000 per month because you wouldn’t be able to pay it.
To give you a very rough idea, most borrowers with bad credit obtain loans between $500 and $5,000, with APRs ranging between 15% to 35.99%.
But there always be people who won’t get approved on unsecured personal loans because of their bad credit or financial situation.
Who offers personal loans?
People with low credit have the highest chances at online lenders. Credit unions are possible, too, because of their flexibility. Honestly, banks are not a good destination because of their high approval criteria. We will explain these in detail later in the guide.
Can I safely apply for a personal loan online?
As long as the lender performs a soft credit inquiry, the answer is yes. You can apply at thousand places without your credit score being affected. If a lender performs a hard credit inquiry, you will get a few points from your score.
As a general rule, most online lenders perform a soft inquiry on the application process. ElitePersonalFinance list only them. If there is an exception, we will mention that.
However, most credit unions, banks, and credit card issuers perform a hard inquiry, so it is not recommended to apply with many if you don’t know what you are doing.
We will explain to you how to deal with that later in this guide.
But for now, let’s make a quick conclusion:
Online lenders are the best places to start with bad credit. There we have the highest chances to get approved. Applying for a loan is free, and there is no obligation to accept the offer, and your credit score won’t be affected at all, even if you apply with thousand of lenders.
Where can I find the best personal loans?
We recommend you trying our marketplace. It is in the largest (or at least we work to make it) online financial marketplace. There we list all financial products in one place.
Recommended links from EPF Marketplace:
Best Personal Loan Rates for Bad Credit 2022 Let’s first see what personal lenders think about your credit and financial situation. Start your search from here. All of these companies perform a soft inquiry to make a mistake applying with all of them.
Loans for Really Bad Credit 2022 We don’t want to see you here, but if you are with really bad credit, if there is no way to avoid getting a loan at all, and if no personal loan company approves you, then you can try these. Unfortunately, these loans are more expensive, and we recommend you try them only in the end case. All of these companies perform a soft inquiry, so your credit score is safe even if you apply with many of them.
If this doesn’t work for you, this is not the end. We move on.
Secured Personal Loans for Bad Credit
If you don’t succeed being approved on unsecured personal loans, the approved amount is less than you expected, or feel that your APR is too high, you can try to secure your loan or add a cosigner. The term ‘secured’ means you are required to put up collateral. For this, people typically use their cars, home, saving accounts.
By putting up collateral or add a cosigner, you become less risky to lenders. As a result:
You can get approved for a personal loan.
The approved amount will be higher.
The APR will be less.
You should expect better terms, more flexibility, and you know what you actually deal with a legitimate lender.
Secured loans really work for many, but people have to be careful.
As a general rule:
Get a secured or cosigner loan only if you are sure that you can pay it on time!
Securing your loan puts your property at risk. Only use this option if you are sure you can repay the loan on time. When you use a cosigner, you don’t need any collateral, so you don’t risk losing your property. But in this case, you risk your friendship with the cosigner, so be careful in both instances.
Pro tip: When you apply for a secured loan or a cosigner loan, look carefully at flexibility options, options for late payments, refinancing options, and other terms. Unexpected situations constantly happen in our life. And in these cases, if we can’t pay our monthly fee, it would be much better to pay a late fee instead of losing your collateral. Ask for flexibility options with your lender before you sign the contract.
Many of our customers report to us that they received loans with APRs as low as 10%, which is really low for those with bad credit.
However, don’t think a legitimate lender will approve you on an amount you can’t pay only because you add securities. Like with unsecured loans, if you make $1,000, no lender will approve you on a loan that costs you over $1,000 per month, only because you added some securities.
Who offers the best secured personal loans?
People with low credit have the highest chances at online lenders. Like we said, credit unions offer loans for people with bad credit. Those who agree to secure their loans have higher chances to get approved and receive great offers. Banks are not a good destination for people with bad credit, but it can work for some of you if you agree to add some securities.
Where to find the best-secured loans?
Recommended links from EPF Marketplace:
Best Personal Loan Rates for Bad Credit 2022 Secured loans, but we recommend starting our search with unsecured. Why is that? Even if you are with bad credit, we recommend trying unsecured loans and seeing what will happen. All of our lenders personal a soft inquiry, so you lose nothing.
Best Personal Loans from Banks 2022 Banks offer secured loans but have higher approval criteria than credit unions. Still, we can try them but be careful with them because most of them perform a hard inquiry.
If you don’t qualify for an unsecured personal loan or don’t want to risk your collateral, you can try alternative payday loans.
Don’t worry that you read the term “payday loans.” Alternative payday loans are different from payday loans. In fact, they are an alternative to predatory payday loans.
The main benefit of them is that they approve people with really bad credit! The truth is that these loans have saved many with low credit from predatory payday loans.
We can define them as everything that is between personal loans and payday loans:
They are cheaper than most payday loans but more expensive than traditional personal loans. In most cases, their APR range from 35.99% to 400%. Very roughly, you should expect 100%.
In most cases, their loans range from $500 to $5,000.
They can be paid in installments, but the period is not too long.
As you can see, they fill the gap between personal and payday loans.
The APR that you see indeed crosses the line. And because of this, these companies try everything possible to prove that they are on the right side. These companies offer many benefits. Here are some of them:
More flexibilities like options to skip a payment with a click of a button, refinancing options, no penalty fees, and more.
Transparent contracts, leading to fewer or no hidden fees.
They provide you with educational materials on boosting your credit score. And for people who work on that and achieve some results, they have better offers.
People who pay regularly also should expect better offers.
As you can these are benefits that no payday lender offers. In fact, payday lenders only try to have your debt cycle and steal more money from you!
Should you get an alternative payday loan?
Well, yes and no. ElitePersonalFinance recommends them only if you have no other options. It’s true that they are time better than payday loans, but still, they are expensive, and some people end in a debt cycle.
Cash advance apps are on the rise. People like them because most of them offer interest-free cash advances. In most cases, the approval is fast, and a credit check wouldn’t be performed. Too good to be true? Well, actually, the catch is that these apps offer relatively low amounts, in most cases $100 to $500. However, in the end, we have to say that they are a great alternative to predatory payday loans. How they work, you will learn on the below-recommended links.
Don’t confuse interest-free apps from the previous section and payday advance apps. When they see the growth of this business, predatory lenders started to create apps to promote their high-interest loans and try to mislead people that they offer cash apps. Payday cash advance apps are nothing but these same payday loans, shaped in the form of an app – to get more customers! How to recognize them? Easy. Their APR is enough to differentiate them. ElitePersonalFinance recommends avoiding them! We don’t list any of those apps on our site.
Credit Card Cash Advance
Credit card cash advances are expensive but still times cheaper than payday loans. If we mention that they are a widely spread option, we have to say that they have saved many people from predatory lenders.
A credit card cash advance is a type of short-term loan added to your credit card. Each credit card has different types of cash advances. That’s why this is something that you should discuss with your credit card issuer once you get to apply for your credit card. Here is what people should expect roughly:
The amount that people should expect typically is a few hundred dollars and, in most cases, is less than the credit card limit.
Some advances charge a flat fee, which in most cases is between $5 to $10. Others charge a percentage of the amount, which is typically about 5%, other charges both.
Credit unions work great for people with bad credit. These institutions don’t pay attention only to your credit score. To approve you, credit unions will review your full financial situation. They put weight on many other factors like your income, debt to income ratio, recent financial transactions, your workplace, etc. In other words, they try to evaluate your actual ability to repay your loan on time. And they know very well that this is not only your credit score, even if it is low…
Credit unions’ APRs are capped at 18%. PALs are capped at 28%. These values are perfect for people with bad credit, especially if we compare them with the 400% payday loan APR!
However, according to a study, credit unions beat even banks in terms of APR. Credit unions’ APR average at 9.09%, while banks’ APR average at 10.24%.
Those who get approved can enjoy not only a cheap APR but many other benefits.
Here are more benefits that credit unions offer:
A high amount. Some credit unions offer up to $100,000. OK, but not all of us can get this amount. The amount of the loan will be evaluated on your actual income and debt to income ratio. For example, you can’t expect a high amount if you don’t make enough to prove your ability to pay it off or are jobless.
Great terms. Big loans can be repaid for a long period of time, even up to 10 years.
Secured, unsecured loans and cosigner loan types. If you can’t get approved on an unsecured loan, some credit unions could offer you to secure them or add a cosigner. These securities add more trust, so people should expect a higher approved and lower APR.
Loan officers, not a computer program, will consider factors beyond your credit score. See here:
But there are some downsides. The main of them is that credit unions perform a hard credit pull on the application process. This gets points from your credit score. So, people can’t shop around like with online lenders.
Credit unions have a great offer for people looking for quick cash and want to avoid the insane-high payday loan fees. Credit unions offer payday loan alternatives, PALs.
PALs are a type of quick cash, like payday loans, but with one main difference. PALs’ APRs are capped at 28%. Ignore these 400% payday APRs for a moment…
PALs offered up to $1,000. And to get approved for those loans, people had to be members for at least a month. But things change. In 2019, the NCUA added a second PAL option, known as PALs II. PALs II offers up to up to $1,000, people don’t have to be members for a month, and their loans can be repaid in 12 months.
The next table shows how these loans differ:
Amount from $200 to $1,000.
Amount from $0 to $2,000.
1 – 6 months terms.
1 – 12 months terms.
People have to be members of the credit union for at least one month before application.
No waiting period.
No prohibition on overdraft/NSF fees.
Overdraft/NSF fee for overdraft service as defined in Regulation E cannot be assessed in connection with a PALs II loan.
Banks are not a great destination for people with bad credit. Banks have high credit and income requirements, and even if people meet them, banks still can require securities and a cosigner. And a little-known fact – banks don’t have too much interest in offering bad credit loans. Credit cards are times more profitable for them. If you want to try but don’t waste too much time.
If you have bad credit, a credit card can be a viable option. However, if your credit score is deficient, it can be tough to get approved. And even if you do, your credit limit won’t be very high. Most credit cards for bad credit are secured, which means you have to put up a security deposit. The amount is determined by your credit score and can be less or equal to your credit limit. Even if the security deposit is less than the limit, the money you get from the card is actually meager when you add on the annual fee. But, if you keep your balance in good standing over time, your issuer may offer you an unsecured card, allowing you to increase your limit and upgrade to better terms. However, this can take a while.
If you manage your balance properly, getting a secured credit card will boost your credit score and help you obtain better terms in the future. However, if you have bad credit and need fast cash, a credit card probably isn’t the best option. But, you can use it as a last resort as you shop around for a better alternative.
To calculate the actual money you can borrow from a secured credit card, here is the formula:
Actual Money = Credit Limit – Security Deposit – Annual Fee – Minimum Monthly Payment * N
For example, imagine you apply for a secured credit card with a credit limit of $500. If the security deposit is $250, your annual fee is $50, and your APR is 18%, your minimum monthly payment works out to $20. Say you plan to make the minimum payment for one month – just to hold you over until you obtain money to pay it. The math looks like this:
$180 = $500 – $250 – $50 – $20 * 1
So while the $500 credit limit seems like a great detail, in reality, you only end up with $180.
Unusual Ways to Get a Loan With Bad Credit
Now, let’s go beyond the traditional ways of getting a loan with bad credit. Here we will discuss some untraditional ways, hacks, and tricks that most of you don’t know.
Buy Now Pay Later Companies
If you can’t get approved for one of the options above, you should consider BNPL companies.
Have you heard of these: Buy Now Pay Later, BNPL, Point-of-Sale (POS) Financing? These are companies like Afterpay, Affirm, Klarna, Quadpay, etc. In fact, this is a growing, relatively new type of lending.
These companies allow you to buy stuff and pay for it later in a few installments. What’s great about them is that some are no credit check companies, so approving a person with bad credit wouldn’t be a problem. Some of them offer no-interest installments. Some of them require no down payment. Better than payday loans …
So, if you are looking for a loan to buy stuff, you can directly go with these companies and pay times less interest than other bad credit loans.
OK, but how can we put this to work for us if we want the money? Here is the trick:
You can actually buy some stuff and sell it online at a small discount. Then you can get the money and use them. But there is a risk of failing to sell the stuff fast.
The trick is to find someone looking to buy something and offer it to him with a small discount.
If you know someone that plans to buy something for $500, you can go with him to the shop where he plans to buy it. Then you apply for BNP and buy this stuff in front of him, give it to him for the same price (if you know him very well), or give him some discount like $10 to $50. It’s a win-win situation. He buys stuff at a discounted price. Then he gives you the money, and you remain responsible for repaying them to the BNPL company. The loan is on your account, so there is no risk for him. Tricky!
OK, but it’s a long and complicated procedure for you. Should you do this? Well, it’s totally up to you. If you can find a cheap personal loan or if the amount you apply for is not big, then probably it’s a waste of time. But if you are in a situation with multiple payday loans that you can’t repay on time, you will find this strategy reasonable if you are a step from a debt cycle or in it.
Without question, this is the most valuable tip we can give you. When you apply to several online lenders, you can compare offers and choose the best for you. Remember, the lending market is extremely competitive, and companies are always trying to land new clients. But, to know which offer is the best for you, you have to try. Now you may be thinking: if I apply for too many loans, won’t it hurt my credit score? Well, don’t worry, because applying through our recommend lenders will NOT affect your credit score in any way. Unlike credit card companies or mortgage lenders, our recommended lenders only perform a ‘soft’ credit pull to assess your creditworthiness. Because of this, you never have to worry about damaging your credit. Keep in mind, once approved, and your loan is finalized, the lender will perform a ‘hard’ credit pull. This will hurt your credit score, but the damage is only about 5 to 10 points. As you continue to repay your loan in full and on time, lenders will report your repayment behavior to credit bureaus, and you will find a raise. And what does this mean for you? A higher credit score, better loan terms, and lower APRs in the future!
When you apply for loans, set aside about one hour, and submit multiple applications. Use your free time on a Sunday afternoon, or choose a day when it’s raining, and you’re stuck inside. Whatever your preference, we recommend that you select 10 lenders and see what they have to offer. In no time, you’ll have plenty of loans to choose from and save plenty of money in the process.
Lower the loan amount
Lenders can feel uncomfortable loaning large amounts of money to borrowers with bad credit, but they may be willing to offer a ‘test’ loan with a smaller balance. If the lender won’t budge and denies you at every turn, ask if lowering the loan amount will increase your chances. If that doesn’t work, talk to the lender directly and ask why your loan was denied. Moreover, ask the lender what steps you can take to improve your chances in the future.
Lower your credit risk in the eyes of lenders
While it takes a lot of hard work and dedication, appearing more creditworthy to lenders requires increasing your credit score and developing a stable and predictable financial profile. Small changes, like fixing your spending habits or even maintaining a regular living address, can all increase your chances. For more information, see our guide on how to appear more creditworthy.
Work on unique risk factors
While your credit score, annual income, and debt-to-income ratio (DTI) are the three main factors lenders use to determine your credit risk, there are plenty of unique factors you should be aware of. These include your marital status, your level of education, and, surprisingly, how often you change your phone number. To read the entire list, check out the full article.
Get grace period
Most loans don’t have a grace period – which means you need to make payments right away. However, if you are not sure that you will pay the next installment, you can increase the loan amount and use it to cover next month’s fees.
What are The Most Common Loan Fees, and How Do They Work?
When most people apply for a loan, they have one thing on their mind: I NEED TO GET THE LOWEST APR! The lower your APR, the lower your costs, right? It’s not complicated. And while decreasing your interest costs is a top priority, we don’t want you to forget about loan fees. These pesky charges are found deep within a lender’s terms and conditions and pop up when you least expect them. To help you understand loan fees, we created a guide.
How to Overcome a Bad Credit Score
Alright, so your confidence is up. You know the exact loan you want and have your eyes open for all those pesky fees. But it’s still not enough. And lenders keep zeroing in on your bad credit score! Look, we understand how frustrating this is. You’re making better decisions. You’ve changed your spending habits. Yet, you still can’t escape the mistakes of the past.
Work on your credit score
We know it’s easier said than done. And we know it’s hard. But don’t get discouraged! Increasing your credit score is a lengthy process, and it requires a lot of work. We could lie and say it’s easy, but we both know that won’t help. So our advice is to keep trying. And most importantly, keep your head up! For more information on how to get your credit score back in tip-top shape, see our guide on 30 ways to increase your credit score.
There is only one legit way to boost your credit report fast. Read your credit report and if you find errors on it, dispute them. According to a Federal Trade Commission (FTC) study, 25% of consumers found errors in their credit reports that impacted their credit score. And 80% of consumers who filed disputes about the errors had the issue rectified in some way.
Ask your lender to report your payments
Last, if you currently have a loan and make in-full and on-time payments, ask your lender to report your repayment behavior to credit bureaus like Equifax, Experian, and TransUnion. Most lenders do, but if yours doesn’t, the action will definitely boost your credit score.
How to Make Money and Avoid Getting a Loan
If you want, you can try to make some money online to avoid getting a loan. Some of them require some time, skills, or investments, which probably is not what you are looking for. However, there are many fast and free ways to make money online.
No credit, no problem! Guaranteed approval! Act now! Fast Cash!
When you see phrases like these, RUN!
When you see terms like “fast cash,” “no credit/no problem,” “easy approval,” there isn’t anything wrong with these terms. But, we see this terminology used by predatory lenders as a way to promote their businesses. When you see shady language, you often find a shady business! For example, there are plenty of legitimate lenders that offer loans to those with bad credit. They also provide funding within the same day. But, they don’t use this language as a way to promote their business. So, keep your eyes open and don’t become their next victim!
How can I spot a manipulative website?
Avoid sites like MyBestPersonalLoanToday.com.
When you visit the site, you see a well-designed page that looks legitimate. But then you see: APRs less than 35.99%! APRs less than 5.99%! Trust us, we’ve reviewed hundreds of lenders, and we can tell the difference between real and fictitious loan companies. So what’s the problem with MyBestPersonalLoanToday.com? Well, it’s simply a lead generation site. It makes false promises to access your personal information. Then, it sells this information to actual lenders. This creates two problems. One, it leaks your personal information. Two, your “guaranteed” APR isn’t real! When you receive your actual offer, your APR will be much higher. Take a close look at their terms and conditions. You’ll see phrases like: we are not a lender. We only connect you with lenders that determine your APR based on your credit score and other risk factors. If your credit score is deficient, you can be required to pay more. Worst of all, most actual offers have APRs that exceed 100% or even 400%. We’ve even seen APRs that exceed 1,000%! It’s rare, but it does happen. So remember, if an APR is greater than 35.99%, it’s not a personal loan.
Watch out for the term “short term loan”
To try and confuse you, lenders use manipulative language to disguise predatory payday loans as “short-term loans.” Remember, short-term loans are NOT PAYDAY LOANS! And while time horizons are similar, that’s the only thing they have in common!
Short-term loans are loans that you pay back in one or a few months. Short-term loans can be personal loans, payday loans, alternative payday loans, or any other loan with a short time horizon. And this is the reason so many borrowers get confused! People don’t know what they’re buying when predatory payday lenders use this term to disguise their harmful products. So, here’s how to empower yourself. If you need a short-term loan, only apply for installment personal loans with APRs of 5.99% to 35.99%. Remember, any higher, and it’s not a personal loan!
Watch out for the term “bad credit loans”
Again, bad credit loans are NOT payday loans!
Payday lenders use this terminology to trick borrowers into purchasing their products. Using generic terms and making the process extremely confusing, they hope you won’t realize what you’re buying. And they don’t have your best interest at heart! Their goal is to trap you in a mountain of debt and force you to rollover your loan. You pay more and more interest and allow them to generate more profits. But like we said at the beginning of this guide, we won’t less this happen to you!
What are Payday and Car Title Loans, and Why Should I Avoid Them?
Payday loans for bad credit
Payday loans allow you to borrow up to $1,000, and you repay the proceeds when you receive your next paycheck. Payday loans are designed to “help” those with terrible credit, but the truth is, they’re a terrible option. APRs average nearly 400%, making payday loans the most expensive form of borrowing in the marketplace. Also, they’re actually illegal in many states! Regulators know how harmful payday loans are, so they’re banned in many states. States that allow the practice to place strict limits on payday lenders’ APRs, fees, and harassment practices. Imagine you miss one of your payments. Payday lenders will let you roll over the loan. You will be required to pay only the interest fee, which doesn’t lower the principal amount. This is how a debt trap begins! We highly recommend avoiding payday loans.
Car title loans
Car title loans are similar to payday loans. However, here you use your car as collateral for the loan. The downside? If you can’t repay the proceeds, the lender will actually seize your car! It’s a dangerous practice and one we don’t recommend. And while collateral will allow you to obtain a higher loan amount, APRs are still roughly 300%. Not much of a discount, huh? Even though the terminology is confusing, there is a big difference between car title loans and secured personal loans. In some cases, we actually recommend secured personal loans. They’re used a lot in business and can offer substantial benefits.
Car title loans are predatory and are also illegal in many states. For that reason, and many others, please avoid them. Why would you secure a loan to receive an APR of 300%? If you plan to get a collateral loan, put your collateral on a personal loan. Even if you are with bad credit, you will be approved, and the APR will be 5.99% to 35.99%, in many cases as low as 10%, which is many times better than this 300%.
Now, let’s have a look at some statistics from The Consumer Financial Protection Bureau (CFPB) and other reputable sources:
According to CFPB, two-week payday loans charge a $15 fee for every $100 borrowed. This works out to an APR of almost 400%.
If you can’t repay the loan on time, you will be allowed to roll over the balance. However, high fees keep you from lowering the principal. As the process continues, you end up paying two, three, or four times the amount borrowed. Sadly, the CFPB found the average payday borrower remained in debt for nearly 200 days.
The CFPB also found that 20,000 bank account holders who made payments to online payday lenders incurred an average of $97 in overdraft and non-sufficient funds fees. The figure is nearly three times more than the $34 incurred by the average American.
Nearly 20% of people who take out car title loans end up losing their car.
What is Annual Percentage Rate (APR), and How Does It Work?
To understand how much you’re paying on your loan, you need to understand APR. Your interest rate only factors in the interest charges on your loan, while APR is a holistic measure that incorporates interest, fees, and any added charges that apply. Remember, APR is always equal to or greater than your interest rate, so it’s a much better measure of your cost of borrowing.
When applying for a loan, reputable companies will always list their APRs. But, many predatory lenders choose to list their interest rates instead. What gives? Once you do the math, your 30% interest rate can quickly turn into a 200% APR! Well, it’s done to disguise hidden fees and make the loan appear more affordable than it really is.
As a general APR formula for a total loan amount per month, take a look at the equation below:
APR = [(Interest Rate + Loan Origination Fee + All Other Applicable Fees) / Principal) * 12 * 100]
For example, say you take out a one-month loan where the lender charges $10 for every $100 borrowed. In this case, your APR works out to 120% [(10 / 100) * 12 * 100)].
How APR Affects The Total Interest?
A great way to decrease your costs is to take out the minimum loan amount possible. If you plan to get a high expensive loan, getting a low amount won’t lose you much money.
Check out the table below:
Total Interest Paid:
So plan your budget better, and you will always save.
How Total Interest Paid Varies by Loan Term?
Remember this rule: the longer the loan term – same APR – the higher your total interest paid. We know. We know. It’s common knowledge that the longer you borrow money, the more it will cost you in the end. But for those that prefer an example, we constructed a table that shows how the cost of borrowing increases as you increase your loan duration. The key takeaway? The shorter the term, the better!
Total Interest Paid: 1-Year Loan:
Total Interest Paid: 3-Year Loan:
Total Interest Paid: 5-Year Loan:
As you can see, decreasing your loan term makes a big difference. Under the 20% APR scenario, decreasing your loan term from 3 years to 1 year saves you $478.16 in total interest costs. When you increase the APR, the results are even more staggering. If you lower your repayment term from 5 years to 1 year – under the 100% APR scenario – you save a whopping $3,425.56 in total interest paid!
To further illustrate the point, check out the table below:
Total Interest Paid: 1-Month Loan:
Total Interest Paid: 3-Month Loan:
Total Interest Paid: 6-Month Loan:
Total Interest Paid: 12-Month Loan:
When comparing the 100% APR, the $100 loan repaid over one 1-month versus the 1-year loan, you save $53.66 in total interest paid. Even more, when comparing the 400% APR, $100 loan repaid over one 1-month versus the 1-year loan, you save $279.98 in total interest paid.
The cost of borrowing also increases as we increase the loan amount.
When comparing the 100% APR, $1,000 loan repaid over 1 month versus the 1-year loan, you save $536.58 in total interest paid. And when comparing the 400% APR, $1,000 loan repaid over 1 month versus the 1-year loan, you save $2,797.32 in total interest paid.
As you can see, reducing your repayment duration has a significant impact on your total borrowing cost. But again, we know it’s difficult to increase your monthly payments, especially when times are tough. If it were that easy, everyone would do it, right? Either way, we want to provide you with the best advice possible, and finding ways to lower your interest costs are critical to getting your finances back in order.
How Can I Lower My APR?
We won’t lie to you. Lowering your APR requires time and effort. To obtain the best terms, you need to show lenders you’re a stable and predictable borrower. Step 1 is working on your credit score. Ensure all of your bill payments stay current and keep your credit card usage below 30% of the total balance. Both of these metrics are important because they play a key role in determining your FICO score. If you get both in order, your credit score will start to move in a positive direction. Step 2 is working on unique factors. How often you move, your employment history, your spending habits – all of these affect your credit score, and therefore, determine your APR. For more tips on how to raise your credit score, see our full guide.
And let’s repeat it. The only way to find the best APR is to shop around. You don’t lose anything.
What Other Factors Should I Consider?
So we’ve covered APR. It’s extremely important, and our analysis above shows that. But don’t ignore the minor details. Late payment fees, refinancing options, flexibility options, late payment grace periods, and whether or not you can skip payment are important factors. Before signing on the dotted line, always read the terms and conditions. That way, you’ll understand the product inside and out and know whether the loan offer is right for you.
Frequently Asked Questions (FAQ)
At ElitePersonalFinance, we do our best to help you understand every issue that may come up during your loan application. But, with all of the complicated financial jargon embedded in these products, many readers still find the process a little confusing. To help ease the burden, we compiled a list of a few questions you may ask along the way.
Can I get a personal loan if I don’t have a bank account?
If you don’t have a bank account, obtaining a “personal” loan is tough. Reputable lenders require a bank account to assess your financial history and deposit funds. Without it, you’ll have to move on to other alternatives. Your two options are car title loans and pawnshop loans. Both of these are secured loans because they require upfront collateral. We don’t recommend either of these options as they often do more harm than good. Our advice is to open a bank account and apply it to reputable lenders. That way, you can obtain a reliable loan without putting your property at risk.
Can I get a personal loan if my income is low?
You can, but we don’t recommend it. If you check some of their other boxes, many lenders don’t have annual income requirements or overlook your income. But, a better approach is to take steps to increase your financial health. There are many different ways to make money in today’s digital economy. For more information, see our complete guide. And who knows, after a few gigs, you may not need that loan after all!
Can I get a bad credit loan if I’m unemployed?
It’s possible, but again, we don’t recommend it. If you follow some of the tips from our guide above, not only will lenders offer you better financing terms, but you may end up earning enough money to forego the loan altogether.
Can I get a personal loan today?
Absolutely. In today’s marketplace, loan applications are processed so quickly that you can receive funding in as little as a few hours. However, it’s better to wait a few days before accepting any offer. As more and more lenders view your application, more offers will come rolling in. If you accept the first one, you’ll likely miss out on a better option.
Will applying for a loan hurt my credit score?
Not at all. Most lenders perform a “soft” credit pull when they receive your application. As such, it doesn’t hurt your credit score. Keep in mind that the lender performs a “hard” credit pull for credit card applications, which can shave 5 to 10 points off your credit score. Pro tip: When applying for a credit card, use the company’s pre-approval tool, and be sure you meet their eligibility criteria. If not, you’ll end up wasting your time and hurting your credit score in the process.
How do I apply for a personal loan?
Step 1 to analyze your credit report. Make sure there aren’t any errors or missing information. As well, make sure your credit score meets the lender’s minimum requirement. For more information on how to read your credit report, see our detailed guide. The next step is to shop around for the best offers. You should apply to at least 5 to 10 lenders. This way, you’ll have plenty of great offers to choose from. You can also narrow your search by the amount of money you need, which lenders have the best APRs, and which lenders offer repayment terms that fit your budget. Next, gather all your personal information, bank account information, and any other information that a lender requires. Now you just need to hit submit! Once your application hits the wire, offers will start rolling in. Analyze the options available and choose the loan with the lowest APR and the most favorable terms.
Personal loans. Secured loans. Alternative loans. Payday loans. With so many products available in the marketplace today, borrowers are often left spinning, trying to figure out which one is right for them. When most people apply for a loan, it’s not because they want to. It’s not a fun experience or a story they can tell their grandchildren. The goal is to help overcome the financial challenges of life. And with so many predatory lenders out there, a harmful product only makes a bad situation even worse. That’s why we always recommend personal loans as your first option. But keep in mind, many lenders will use complicated financial jargon to disguise their harmful products as personal loans. And the key to spotting the scammers is to check their APRs. If APRs are capped at 35.99%, you know the product is a personal loan. Any higher, and you’re in a different category. Remember, knowledge is power! And by reading this guide, you’re equipped with all the knowledge you need to find the right loan and get your finances back in order. But, the next step is up to you. We know you can do it. You just have to believe in yourself!