A definition to high-risk lenders according to Thomas Nitzsche, media relations manager for Clearpoint Credit Counseling, “A high-risk loan is a subprime loan that is offered to someone with a blemished credit history.”
High-risk loans are designed for people with really bad credit, no credit history, or other financial problems, such as very low or non-provable income. There are high-risk lenders who offer loans to these people, but this type of lending remains risky for both lenders and borrowers. High-risk lenders protect themselves by placing insane high-risk interest rates.
ElitePersonalFinance researched all high-risk lenders. Here is what we have found.
Most high-risk lenders are actually payday lenders, auto title lenders, and pawnshop lenders. Their APRs average: payday loans – 400%, auto title loans – 300%, pawnshop loans – 200% . Most of them come with even higher than 700% and 1,000% interest.
The Good News. We have found some high-risk lenders, different from payday, pawnshop, and auto title lenders, offering cheaper loans to those with really bad credit. We will show you them, so don’t lose hope. But in the end, they are still more expensive than traditional personal loans for people with good credit.
Pro Tip: If you are with really bad credit, avoid getting a loan at all. Wait for a time and work on your credit score. When that increases, then get a loan.
Note! This article focuses on high-risk personal lenders only. But there are other types like mortgage, auto, student, business, etc. Here they are:
Who Offer High-Risk Loans to People With Bad Credit?
Like we said, most high-risk lenders are payday, pawnshop, and auto title lenders. Their loans are very expensive, and we don’t recommend them at all. However, there are other bad credit lenders with cheaper offers. We will show you exactly them.
First of all, it’s critically important to understand the types of lenders who offer them. And next, to understand how they work, what they actually offer, and their specific requirements. This will help you make a list of those available to you.
Before we move on to those with bad credit, we highly recommend reading our detailed guide on bad credit loans. There we have the full information on that topic. It’s really the best and most comprehensive guide online, helping people with bad credit find the best offer for you and save a lot of money.
We also covered all about bad credit personal loans in this video:
In this video, we have more detailed information about all other types of bad credit loans, different than personal loans:
Unsecured Personal Loans for Bad Credit
There are many personal lenders working with those with bad credit. Traditional personal loans typically are high-amount installment loans, of up to $100,000, with APRs between 5.99% to 35.99%. For those with bad credit, things change. People with bad credit shouldn’t expect $100,000 with an APR of 5.99%, or close to it. Although every bad credit lender is different, roughly, people with bad credit should expect a loan between $100 to $10,000 with APR between 15% to 35.99%. Each lender will evaluate your income, credit score, and more factors to give you an exact offer. You can find the best personal loans for bad credit 2022 at our Marketplace:
Conclusion: Although personal loans aren’t types of high-risk loans, they are the cheapest, so this should be the first destination for those with bad credit. Unfortunately, the approval for those with bad credit is not guaranteed.
Secured and Cosigner Loans
Like we have mentioned, expectedly bad credit loans are always more expensive, and approval for people with bad credit is not guaranteed. Those who want to improve their chances of getting approved or have been approved but are not happy with their offer can consider secured loans or adding a cosigner. These securities make you look less risky to your lenders and lead to higher chances of being approved and a better offer – a higher amount and lower APR. However, in this case, you put at risk your collateral or the relationship with this person.
In our Marketplace, we have the best secured personal loans 2022:
Note! We have mentioned “best secured personal loans,” not “best secured personal loans for bad credit.” Not only people with bad credit can benefit from those types of loans. By securing their loans, those with good credit can increase their amount and decrease their APR significantly.
Alternative Payday Loans
Alternative payday loans are a type of significantly improved payday loans. They work for people with really bad credit. In fact, some of them are no credit check loans. They are one of the sections that make this article different. Other sites don’t include them in their lists or explain them correctly, which misled people. Some consider them as personal loans, and others add them to their payday loan lists. Both are wrong. Alternative payday loans are a new type of lending. They have been created to fill the gap between personal and payday loans. We define them as loans that are between personal and payday loans. People with really bad credit searching for high-risk loans should pay special attention to them. In the end, alternative payday loans will help most of you avoiding predatory high-risk lenders. Below we will review a few of them. Do you want to learn more:
Banks have high credit score requirements. So, people with really bad credit shouldn’t waste time.
However, with credit unions, things are different. Credit unions can’t be categorized as a type of high-risk lenders, but they work with people with bad credit. That’s why we decided to include them in this article. Credit unions don’t consider people’s credit reports as the main risk factor. Instead, they evaluate people’s real ability to repay their loans by paying attention to other factors like income, DTI ratio, workplace, free cash flow, recent financial transactions, etc. For example, those with bad credit that can prove good income can be approved on a personal loan.
Credit unions cap their personal loans at APRs at 18% and their PALs at 28%, which can be considered a great offer to those with really bad credit.
Does it true that I have to be a member for at least a month to get a loan from a credit union?
No. It was true, but things change. Let’s look at the table below:
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.
There are new regulations. According to PALs II:
People can get up to $2,000. Before, it was $1,000.
The terms now are 1 – 12 months. Before, they were 1 – 6 months.
People can register and get PAL instantly. Before, there was a waiting period of a month.
Information of all credit unions can be found at our Marketplace:
It’s is a new type of lending, and most of you didn’t know about it. But now you know. What if we tell you that loan apps offer quick cash between $100 to $500, approve people very easily, don’t perform a credit check, and come with a 0% interest rate?
Loan apps haven’t been created exactly as alternatives to high-risk loans. But people with bad credit can benefit from them. Think of them as a loophole in the bad credit lending business.
Sounds too good to be true. Ok, apps really work, but there are catches.
This is another new type of new lending – “Buy Now Pay Later.” Most of these companies are no credit checks. Most of them have 0% interest rates, but like loan apps, there are catches. For example, BNPL only allows people to buy stuff. Again, those companies haven’t been created exactly as an alternative to high-risk predatory loans, but we can use this loophole.
To learn more about these companies and their catches, go to:
These are a type of high-risk direct lenders offering loans to people with really bad credit. We highly recommend that people avoid them because:
They are very expensive.
They lead people into a debt cycle.
There are many cheaper options for people with really bad credit.
According to CFPB, payday loan APRs average at 400%.
Pawnshop loan APRs average at 200%.
Auto title loans APR average at 300%, but for this “discount,” people are required to secure their loans. Typically their collateral is their car.
Direct High-Risk Bad Credit Lenders
Direct lenders for bad credit are scams! In our study, we explain why. There is nothing bad in getting a loan from a direct lender. However, our study found that many predatory lenders have abused the direct high-risk lender niche, manipulating the terminology. In brief, expensive payday lenders present them as direct high-risk lenders – the only option to people with bad credit. And this is not true!
In addition, they offer “guaranteed approval,” which is another type of scam! There are no guaranteed loans!
Bad credit loans; high-risk lenders; guaranteed approval; direct lenders only…
These terms are great promotions and work very effectively for people with bad credit. But they are scams! There is nothing bad in these terms, but mostly predatory lenders use them.
For some people, they are great catches. For people, reading ElitePersonalFinance’s guides – a red flag!
Have you seen WellsFargo or Citi offering high-risk loans, direct lenders only with guaranteed approval?
People with bad credit should shop around with both direct and non-direct lenders. For example, there are many legitimate non-direct lenders offering times cheaper loans to people with bad credit.
Best High-Risk Lenders and Alternatives 2022
Below we will review the best high-risk lenders and their alternatives in 2022. We will show you the best of each category, starting with personal loans with bad credit. Then we will move with credit unions, alternative payday loans, and loan apps to those who can’t qualify for personal loans.
EvenFinancial can’t be categorized as a type of high-risk lender. But this could be your best pick! EvenFinancial is one of the largest connecting services, and they have bad credit lenders in their network of over 300 of the biggest US lenders.
One of the disadvantages is that the company requires a minimum credit score of 550, which will make it impossible for some people looking for high-risk loans to apply. But those who meet this requirement can find really great deals. The company offers the highest amount on the market, between $1,000 to $250,000. Their APRs are between 2.49% to 35.99%.
The highest amount unsecured loans: up to $250,000.
The APR for people with good credit starts at 2.49%.
They partner with over 300 of the largest direct and non-direct personal lenders in the United States.
Only a 550 credit score is required to apply.
Personalized offers are available instantly after you complete the application.
No hard inquiry on the application process.
You save a lot of time by applying to different lenders.
You receive multiple offers at once, which helps you get the best.
People with very bad credit of less than 550 can’t apply.
Not a direct lender.
No COVID programs.
EvenFinancial qualification criteria:
18 years old,
U.S. citizen, permanent resident,
SSN or passport,
U.S. bank account,
Min. credit score: 550,
Min. credit and income requirements: Vary by lenders.
EvenFinancial doesn’t have specific programs to help people affected by COVID. That’s because EvenFinancial is a connecting service. They only connect people with lenders. Each of these lenders has different COVID programs. People should discuss their situation with their lender.
You can find all loan comparison sites in our Marketplace.
CashUSA is not a marketplace connecting people and bad credit lenders. CashUSA is a perfect example of a non-direct high-risk lender. What’s great about this company is that they offer only personal loans for people with very bad credit. This means that their lenders are required, that their APR can’t exceed 35.99%. CashUSA offers between $100 to $10,000.
CashUSA is best for people with really bad credit who want to avoid payday loans.
There is no origination fee.
A high loan amount for people with bad credit: up to $10,000.
A great alternative to predatory high-risk lenders.
Min. credit score: 0
A high approval rate for people with bad credit.
They have many lenders on their platform.
Their APRs are capped at 35.99%.
People with bad credit receive offers close to the highest limit APR of 35.99%.
No guaranteed approval for all people.
No COVID program is available.
CashUSA qualification criteria:
Be at least 18 years old,
Be a U.S. citizen or permanent resident,
Earn a steady monthly income of at least $1,000 after taxes,
Have a checking account in your name,
Be able to provide work and home phone numbers, as well as a valid email address.
CashUSA doesn’t have specific programs for those affected by COVID. That’s because CashUSA is not a direct lender. They only connect people with lenders. Each of their lenders has different COVID programs. People should discuss their situation with their lender.
OppLoans offer high-risk alternative payday loans. Their loans are unsecured, and the amount varies between $500 to $4,000.
OppLoans is no credit check loan. This means that people with really bad credit can be approved. But as you know, nothing here is free. They are very expensive. OppLoans APRs is between 59% to 160%, but it varies by state. Their terms vary by state and are between 9 to 18 months. Above, we listed 1 to 18 months because people can give their money back when they want. Those who give their money back will get a big discount!
OppLoans is one of the best alternative payday loans.
OppLoans review your people’s income, DTI ratio, workplace, recent transaction history. People should be able to prove an income of $18,000 per year.
There are no origination, prepayment, and late fees.
OppLoans have a refinancing option for those who have paid $400 or 15% of their amount.
OppLoans allow you to use their loans for any purpose. The most common are debt consolidation, refinance, home improvement, travel, extra expenses.
OppLoans is an alternative to expensive high-risk loans.
OppLoans is a direct lender.
Offers only unsecured loans.
People with very bad credit can be approved.
No credit check, no hard credit inquiry, meaning your credit won’t be affected.
Better than traditional payday loans.
An amount of up to $4,000, which is relatively good for those with bad credit.
Their APR is cheaper than payday loans.
No origination and prepayment fees.
Up to 18 months repayment.
Instant approval and funding.
Reports payments to all three credit bureaus.
At least $18,000 provable income is required.
Not everyone gets approved. There is no guaranteed approval!
Not available in all states.
Not available in all states.
OppLoans qualification criteria:
18 years old,
U.S. citizen, permanent resident,
SSN or passport,
Min. credit score: 0,
Minimum monthly income: $18,000,
Have a U.S. bank account with at least 90 days of history,
What Should I Do If I’m Considered a High-Risk Borrower?
Like we said at the beginning of the article, try to avoid getting a loan at all. The truth is that many people who get bad credit loans run into financial troubles in time. We really don’t want this happening to you. Are you sure that you really have to get a loan now? Are you sure that there are no other options? Try something. Get cash from your workplace, ask someone to help you, cut from your expenses, etc. In the end, even if you really decide to get a high-expensive loan, try at least to lower the amount to a minimum and try to repay it faster. That way you will save pay fewer fees.
Start working on your credit score and when it improves, then get a loan. The price will be times cheaper.
Are you sure that your credit score is so bad? Check your credit score now and review it for errors. Many credit reports contain errors that people can report instantly. The credit repair process is long, this is the only thing that can boost your credit score fast, and it is absolutely legit.
Can I Find Cheap Business, Student, Mortgage, and Auto Bad Credit Lenders?
In this article, we discussed only personal and payday lenders. Those interested in other types of loans should visit other sections.
Mortgage and auto loans are types of secured loans. The collateral in these cases will be your house or your car. People with bad credit should expect higher interests, but the difference wouldn’t be high like personal loans.
What Is The Difference Between High-Risk Personal Loans and High-Risk Payday Loans?
First of all there the term high-risk personal loans is slightly incorrect. There is no such thing. It’s true that we talk about “personal loans for bad credit,” but they can’t be categorized exactly as a type of high-risk loan. Bad credit personal loans serve to people with low credit, but no so low! Personal loans for bad credit have some minimum credit and income requirements. High-risk loans serve people with really bad credit and in really bad financial situations.
People should think about this difference, as the difference between bad credit personal and payday loans. We have already defined it above, but here it is again, in brief.
Personal loans: Up to $100,000, APR between 5.99% to $35.99%.
Payday loans: Up to $1,000, APR averaging at 400%.
Personal loans for bad credit: Up to $10,000, APR between 15% to $35.99%.
High-risk payday loans: APR over the average, it can be over 1,000%.
Is There a Difference Between Bad Credit and High-Risk Loans?
Both of these types of loans are designed for people with bad credit. The term bad credit loan is probably broader and includes all people with bad credit.
High-risk loans are those for people with really bad credit.
So, high-risk loans can be considered as a part of bad credit loans.
Are There Guaranteed High-Risk Loans?
NO! This is a scam.
First of all, there is no such thing as guaranteed approval. People with good credit have many options and probably will be approved, but there are no guarantees.
When we talk about people with bad credit, things change. People looking for high-risk loans have low chances of being approved. Here the term “guaranteed loans” should be avoided at all.
And if we add the effect after the COVID, then things change again. Lenders change their rules, the lending market change, and no one knows what will happen.
Then, why do some lenders offer “guaranteed approval loans?”
Misleading the terminology. We have explained this above.
Are High-Risk Lenders No Credit Check?
Most high-risk lenders don’t perform a credit check. But this is not true for all of them. For example, most personal lenders offering high amounts will check your credit score. Companies offering small loans, like apps, or those offering expensive products, won’t check your credit score.
Are Alternative Payday Loans Recommended?
It’s true that alternative payday loans are better than traditional payday loans, but still, they are expensive.
We highly recommend that people use high-risk alternative loans in the end case.
Expected APRs by Type of High-Risk Loans
Here is the interest people should expect on personal, alternative payday, and traditional payday loans. In this example, we use a loan amount of $100.
Total Interest Paid: 1-Month Loan:
Personal Loan for Bad Credit
15% – 35.99%
$1.25 – $3
Alternative Payday Loan
Am I a High-Risk Borrower?
Many people consider them high-risk borrowers, but they are wrong.
First, they consider their credit score too low, in case it is not! People with a credit score of less than 500 are considered high-risk. However, people with a credit score of over 600 have times better options than payday loans.
Many people don’t check their credit reports for errors. Most credit reports contain errors that can be reported instantly. This leads to instant credit score boots.
As you can see, most of the high-risk lenders are no credit checks. Many people consider them high-risk only because of their credit score. These days many lenders pay more attention to other factors like income, DTI ratio, workplace, etc. This should make sense.
At our loan help center, we receive such inquires every day.
How to Boost Your Credit Score?
Credit score increase is a long process. For people who want to learn from us, we recommend our article.
But before we move on, there is only one way to boost your credit score fast and free. It’s to get your credit score and review it for errors. About 30% of credit reports contain errors. If you find errors, you should report them instantly. This leads to instant credit score boots.
Are High-Risk Payday Loans Legit?
Legitimate lenders are only those that are licensed and meet state regulations.
Different states have different regulations about payday loans. In some states, they are not regulated at all, which makes them legit in all cases. Other states allow them but with many restrictions. Other states ban them.
For example, expensive high-risk payday loans can be legit in some states because of a lack of regulation. So, we can’t say the lender is illegal. But, we still consider them scams, or at least highly recommend that people avoid them.
Are High-Risk Loans Unsecured and Installment?
The traditional high-risk loans are unsecured. However, people with very low credit scores should consider securing their loans or adding a cosigner to avoid very high fees.
Some of them are single-payment loans, and others are installments.
What Type of High-Risk Loans Exist?
In general, the types of high-risk loans are based on the type of people’s problem. They are:
No credit check loans. These products are available to those who have problems with their credit score. Possible problems include bad credit score, insufficient credit history, bankruptcies, or other lines of credit like charge-offs, delinquencies, etc.
No income verification loans (NIV). These products are offered for people who can’t prove enough income to pay the money back.
What are No Income Verification Loans?
No Income Verification Loans (NIV) are when the lender doesn’t check people’s income. No income verification loans can be much dangerous than no credit check loans. People with low credit scores can still have enough income to repay their loans. However, people with not enough income, who get high-risk loans, should expect financial problems.
I Have No Other Options
If there are no other options, and you decide to get a high expensive loan, then here is what we recommend.
Pay it as fast as possible. Cut from your spendings, and work to repay it faster. Every day you get interests added.
You also start working on your credit score. Why not?
Next time, you will qualify for better loans.
What Are Tribal Loans?
Tribal loans are offered by Native American lenders and are exempt from certain state laws. The exemption allows them to charge higher APRs and even offer payday loans in states where the product is illegal.
Because we receive so many inquiries regarding high-risk loans, we were inspired to write this guide. But throughout our discussions, we found that people often perceive their creditworthiness to be much worse than it really is. And this negative perception leads them to accept loans from the first lender who says yes. Predatory lenders thrive off this behavior. They offer very expensive loans.
High-risk loans can be considered a scam because many lenders make this look scam. So, as a word of advice, DO NOT search for high-risk loans. Instead, search for bad credit personal loans. By doing so, you’ll find you have more options than you think.