Best Installment Payday Loan Alternatives for Bad Credit of October 2024
If you’re considering an installment payday loan, don’t waste your time! They’re costly and come with average APRs of 400%. Moreover, if you fall behind on your payments, you run the risk of falling into a vicious debt cycle. In 2024, the lending market has evolved and offers plenty of better alternatives. If you have bad credit, there are solutions for you. And while you may not get the lowest APR, your rate will still be much less than 400%!
Watch our video that shows how people with bad credit can get a personal loan.
Have a look at the options below.
The companies on our list are highly reputable and offer unsecured loans to those with bad credit. But, if you don’t qualify, consider a secured loan or a co-signer loan. If that fails, credit unions are your next best option. Federal credit unions cap their APRs at 18%. As a last resort, look to alternative payday loans. Their APRs are more expensive, but they’re still much less than traditional payday loans.
Best Installment Payday Loan Alternatives for Bad Credit of October 2024
| Loan Company: | Min. Credit Score: | APR: | Amount: | Approval: | Terms: | Type: |
|---|---|---|---|---|---|---|
| BadCreditLoans | 0 | 5.99% – 35.99% | $500 – $10,000 | < 1 Day | 3 – 36 Months | Personal Loans for Really Bad Credit |
| OppLoans | 0 | Vary By State | $500 – $4,000 | < 1 Day | 9 – 18 Months | Alternative Payday Loans for Really Bad Credit |
| CashUSA | 0 | 5.99% – 35.99% | $1,000 – $10,000 | < 1 Day | 2 – 5 Years | Secured Personal Loans for Bad Credit |
| LendingTree | 500 | 3.99% – 35.99% | $1,000 – $50,000 | < 1 Day | 1 – 5 Years | Personal Loans for Bad Credit |
| LendingPoint | 585 | 9.99% – 35.99% | $2,000 – $25,000 | 1 – 3 Days | 3 – 5 Years | Personal Loan for Bad Credit |
| PersonalLoans | 580 | 5.99% – 35.99% | $1,000 – $35,000 | < 1 Day | 90 Days – 72 Months | Personal Loans for Bad Credit |
We always mention how the lending market has evolved in 2024. More than ever, companies are opening their doors to people with bad credit – offering higher approval rates and much better terms. Compare that with payday loans. Do you see any evolution? The only change they make is offering ‘installment payday loans.’ But what are they? And are they a better option?
Well, at ElitePersonalFinance, we decided to investigate the matter!
But before we get into the details, we want to explain why traditional payday loans are so dangerous. First, payday loans have an average APR of 400%. Next, you can only borrow up to $1,000, and you need to repay the proceeds within two weeks. If you miss a payment, you’re charged a late payment fee, and interest continues to accumulate on your loan. Moreover, payday lenders are extremely aggressive in debiting your checking account when this happens. The Consumer Financial Protection Bureau (CFPB) found that payday loan borrowers incurred bank overdraft fees that were 185% higher than the average American. The point is: payday lenders want you to think they’re your only option. But stay with us, and we’ll show you they’re not!
Back to installment payday loans.
They’re an improvement over traditional payday loans because they allow you to repay the proceeds over a few months. However, their APRs are still extremely high, and the longer-term actually costs you more money in the long run. Because of this, we recommend you avoid them.
Pros of installment payday loans:
- You can repay the funds over a longer term.
- The longer term slightly lowers the risk of falling into a debt cycle. However, it’s still very high.
- Loans are designed for people with bad credit.
Cons of installment payday loans:
- Average APRs are 400% making them extremely expensive.
- There are hidden fees, rollover charges, and no refinancing options.
- Your total interest paid is through the roof!
Most people don’t realize that a longer repayment period actually increases the loan’s total amount.
Have a look at the table below. Notice how increasing the repayment term causes your total interest paid to get out of hand quickly:
| Amount: | APR: | Total Interest Paid: 1-Month Loan: | Total Interest Paid: 3-Month Loan: | Total Interest Paid: 12-Month Loan: |
| $100 | 400% | $33.33 | $72.96 | $313.31 |
| $500 | 400% | $166.67 | $364.87 | $1,565.52 |
| $1,000 | 400% | $333.33 | $729.72 | $3,130.65 |
As you can see, your total interest paid increases significantly the longer you hold the loan. By extending the term of a $100 payday loan from one month to 12 months, you pay an extra $279.98 in interest.
The numbers are even more staggering for a $1,000 payday loan.
By borrowing $1,000 at an APR of 400% for 12 months, you end up paying $3,130.65 in interest. That works out to 3.13 times the amount you borrowed! Moreover, repaying that same loan in one month rather than 12 saves you $2,797.32 in total interest paid.
Best Alternatives to Installment Payday Loans
Because lenders offer so many different products, we place all of them in different groups. Some loans have lower APRs, while others have more or less risk:
| Loan Type: | Expected APR: | Average Amount: | Risk: |
| Unsecured Personal Loan | 15% – 35.99% | < $1,000 – $5,000 | Low |
| Secured Personal Loan | 10% – 20% | < $1,000 – $10,000 | Low |
| Credit Unions | 18% – 28% | < $1,000 – $5,000 | Low |
| Alternative Payday Loans | 35.99% – 400% | < $1,000 – $5,000 | Medium |
Unsecured Personal Loans for Bad Credit. With rising competition and lenders now looking at more than just your credit score, unsecured personal loans are attainable if you have really bad credit. Your APR will be on the high-end, but personal loans never exceed 35.99%. We recommend you apply to as many lenders as you can. They perform a ‘soft’ credit pull so that it won’t hurt your credit score. And the more lenders you have competing for your business, the better your chances of obtaining great terms.
Secured Personal Loans for Bad Credit. If you don’t qualify for an unsecured loan, move on to secured loans and co-signer loans. You have to put up collateral with secured loans, but this increases your chances of being approved and lowers your APR. But remember, only take out a secured loan if you’re sure you can repay the funds on time. If you fall behind on your payments, you risk losing your property. It’s a great way to lower your APR with a co-signer loan. If you have a friend who’s willing to sign for you, it can make all the difference in obtaining an affordable loan.
Credit Union Cash Advances. If you don’t qualify for the loans above, credit unions are a great fallback option. They’re non-profit enterprises, and because of this, their products are used to help those in the community rather than generate a profit. To qualify, however, you need to become a member. This typically requires a one-time fee of $25. But, their APRs tend to range from 18% to 28%, and federal credit unions cap their APRs at 18%.
Alternative Payday Loans. We only recommend alternative payday loans as a last resort. If you’re unfamiliar, alternative loans are a hybrid between standard personal loans and predatory payday loans. Personal loan APRs are capped at 35.99%, while payday loan APRs average 400%. Alternative loan APRs fall right