What exactly are loan companies like OppLoans, LendUp, RiseCredit, NetCredit? How do they work? Are they legit? We call them alternative payday loans. They are more expensive than personal loans but cheaper than payday loans. Here we will show you the best of them. But before that, watch our video that shows how people with bad credit can get a personal loan. Still, many of you with bad credit have the chance to qualify for a personal loan.
Watch our video that shows how people with bad credit can get a personal loan:
With their recent rise in popularity, we’ve received plenty of inquiries regarding whether borrowers can trust lenders like these companies. To help make the process easier, we at ElitePersonalFinance decided to dig a little deeper and clarify some issues.
But, before we dive in, what are alternative loan companies like these, and how do they differ from traditional personal loans or payday loans?
While you may have read different things about them online, remember, most of the material isn’t written by financial experts. Many writers confuse alternative loans with payday loans or even mistake them for personal loans. The truth is that alternative loans are neither and belong in a category of their own. In brief alternative payday loans are everything that is between personal loans and payday loans. See, personal loans have APRs that top-out at 35.99%, while payday loans have APRs average of 400%. Alternative payday loans typically range between 35.99% and 400%. Personal loans often allow you to borrow between $1,000 and $100,000, while payday loans are usually capped at $1,000. However, alternative payday loans typically range from less than $1,000 to upwards of $5,000. The purpose of alternative loans is to help borrowers with extremely bad credit. They’re designed for those who don’t qualify for a personal loan but want to avoid payday loans.
Beyond that, alternative loans have flexible terms and are designed a lot better than payday loans.
So sit back, and see if there is a solution that’s right for you.
OppLoans is one of the most popular alternative loan companies, and one we highly recommend. The company offers loan amounts ranging from $1,000 to $5,000, with APRs ranging from 99% to 199%. Loan duration range from 9 to 36 months. OppLoans charges 0 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.
So what do you need to qualify?
You must be at least 18 years old or 19 in Alabama and Alaska.
You must have a recurring income source; if this is employment income, you need to work for your employer for at least three months to be eligible.
You must have a traditional bank account, in your full name, with at least 90 days transaction history.
You must receive your paycheck through direct deposit.
And what about fees?
Currently, OppLoans charges a loan origination fee of 0% to 3%. In the state of California, the company charges a $75 administration fee, a late payment fee of $15 for every 15 days your loan is past due, and a $15 fee every time a check bounces.
As an added benefit, OppLoans offers refinancing options to select borrowers. While eligibility is left to its discretion, you will see a ‘Refinance Now’ option in your customer portal if you qualify. You can request additional funds or reduce your monthly payments through the link.
Today, OppLoans offers installment loans to residents in Alabama, California, Delaware, Georgia, Idaho, Illinois, Mississippi, Missouri, Nevada, New Mexico, South Carolina, Texas, Utah, and Wisconsin. However, the company also offers loans through FinWise Bank – an entity OppLoans contracts to handle certain loan products. These loans are available to borrowers in Alaska, Arizona, California, District of Columbia, Florida, Hawaii, Indiana, Kentucky, Louisiana, Maine, Michigan, Minnesota, Montana, Nebraska, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Dakota, Washington, and Wyoming.
Last is its line of credit. This option is only available to Kansas, Tennessee, and Virginia residents.
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 99% to 199%.
Loan origination fees range from 0% to 3%, and other fees can apply.
If you don’t qualify for a personal loan, companies like OppLoans are a great way to avoid payday loans. With lending options available in almost every state, OppLoans can provide the cash you need to withstand any emergency. And while its APRs are higher than traditional personal loans, OppLoans caps its APRs at 199%, enabling you to keep interest costs at a manageable level. The best part about OppLoans is there are minimal requirements to qualify. As long as you have some form of recurring income and are over the age of 18, you’re usually eligible for an OppLoans product. So if you need a reliable loan and personal loans aren’t an option for you, OppLoans is a great place to start.
As another reliable alternative lender, LendUp offers unsecured loans that range from $100 to $1,000. Loan duration range from seven to 30 days for single payment loans and three to 12 months for installment loans. If approved, you can also receive funding in as little as one business day.
LendUp doesn’t directly list its APRs because – according to its site – APRs vary depending on your credit score and state of residence. However, as a quick reference, California loans, which include fees, have APRs that range from 214.13% to 917.71%. In Louisiana, APRs range from 156.43% to 971.17%, and in Mississippi, APRs range from 237.25% to 1,016.79%. On average, APRs range from 134% to 1,252% for single payment loans and 30% to 180% for installment loans.
And what about fees?
Well, LendUp charges loan origination fees, but they also vary by state. In California, fees for single payment loans total $17.60 for every $100 borrowed, and the company charges a $15 fee for every single payment check that bounces. For installment loans, fees are $5.00 for every $100 borrowed, and the company charges a $10 fee for every installment check that bounces.
Through its LendUp Ladder, you can also rebuild your credit profile. Each time you make on-time loan payments and complete its free education courses, points are credited to your account. As you reach new milestones, you’re able to access increased borrowing amounts and can also have your credit history sent to major credit bureaus. The program is designed to help borrowers increase their credit score and receive more favorable loan terms.
Its milestones look like this:
Silver members can receive up to $250 for a single payment loan.
Gold members can receive up to $250 for a single payment loan and up to $200 for an installment loan.
Platinum members can receive up to $250 for a single payment loan and up to $500 for an installment loan.
Prime members can receive up to $250 for a single payment loan, up to $500 for an installment loan, and up to $1,000 for a Prime loan.
Platinum members can also opt-in to the credit reporting program, while Prime members are automatically enrolled.
Keep in mind, LendUp alternative loans are only available in select states. These include: California, Louisiana, Mississippi, Missouri, South Carolina, Tennessee, Texas, and Wisconsin.
Loans are available to those with bad credit.
Receive funds in as little as one business day.
LendUp has no annual income requirement.
Installment loan APRs are extremely affordable and range from 30% to 180%.
Through its LendUp Ladder, you earn points that can lead to larger borrowing amounts and help increase your credit score.
LendUp offers credit education courses that aim to increase your financial knowledge.
Single payment loans have APRs that range from 156.43% to 1,016.79%.
Loans can have fees upwards of 20% of the amount borrowed.
Loans are only available in California, Louisiana, Mississippi, Missouri, South Carolina, Tennessee, Texas, and Wisconsin.
While loan amounts are less than companies like OppLoans, LendUp does offer competitive APRs on its installment loans. If you don’t qualify for a personal loan, using LendUp is another great way to avoid payday loans. Unlike sites like OppLoans, LendUp products are only available in 8 states. However, there is no annual income requirement, and you only need a valid checking account to apply. Moreover, through its LendUp ladder, you can build your credit score and increase your chances of obtaining more favorable terms in the future. So, if your income is sparse, your self-employed, or only working part-time, LendUp can provide solutions that fit your needs.
Offering loans ranging from $500 to $5,000, RiseCredit can provide access to funds in as little as one business day. Like its peers, RiseCredit offers APRs that vary depending on your credit score and state of residence. In California, bad credit loans have APRs that range from 60% to 225%, in Texas, 60% to 299%, and in Alabama, 60% to 295%. Loan duration varies by state, but they typically range from four to 26 months. As well, RiseCredit has no penalty for early repayment and, unlike many of its competitors, has zero loan origination fees.
What’s great about RiseCredit is the company offers a 5-Day Risk-Free Guarantee. If you change your mind regarding whether you need the loan, you can return the principal within 5 business days without being charged any interest or fees.
Another great benefit is RiseCredit allows loan refinancing – although it’s subject to the company’s discretion. Not all states are eligible, but applying does not affect your FICO Score. As well, if you can’t make a payment, RiseCredit allows a 7 day extension period, though charges continue to accrue on overdue amounts.
So what do you need to qualify?
You must be at least 18 years of age or 19 if you live in Alabama.
You must be employed or have a recurring source of income.
You must have a valid checking account because savings accounts are not accepted.
You must have a valid email address to receive your account information.
Keep in mind, RiseCredit loans are only available to borrowers in select states. These include: Alabama, California, Delaware, Georgia, Idaho, Illinois, Kansas, Louisiana, Mississippi, Missouri, New Mexico, North Dakota, Ohio, South Carolina, South Dakota, Texas, Utah, and Wisconsin.
High loan amounts ranging from $500 to $5,000.
Receive funds in as little as one business day.
The company offers refinancing options to borrowers in select states, and applying won’t affect your FICO score.
There are no prepayment penalties, and unlike companies like RiseCredit, it charges zero loan origination fees.
With RiseCredit 5-Day Risk-Free Guarantee, you can return your loan principal within five days without incurring any interest or fees.
If you can’t repay your loan on time, RiseCredit allows borrowers a seven day extension period.
APRs can range from 60% to 299%.
You must have some form of recurring income to qualify.
Loans are only available in Alabama, California, Delaware, Georgia, Idaho, Illinois, Kansas, Louisiana, Mississippi, Missouri, New Mexico, North Dakota, Ohio, South Carolina, South Dakota, Texas, Utah, and Wisconsin.
Unlike many of its competitors, RiseCredit does not charge any loan origination fees. The company also offers a 5-Day Risk-Free Guarantee, which allows you to return the loan principal within five business days without incurring any interest or fees. Without a doubt, both practices are unique to RiseCredit. Offering small loans as little as $500 to larger loans upwards of $5,000, RiseCredit has financing options for almost any short-term expense. With manageable APRs as low as 60%, the company provides a great alternative if you can’t qualify for a personal loan. However, while companies like LendUp have no annual income requirement, RiseCredit does mandate that you have some form of recurring income. But, if you’re self-employed or receive Social Security benefits, RiseCredit is a great source to obtain the financing you need.
NetCredit offers alternative loans to borrowers in select states with no minimum credit score requirement. Unsecured loans range from $1,000 to $10,000. NetCredit APRs are quite reasonable. While companies similar to NetCredit have APRs that exceed 200%, their APRs range from 34% to 155% in California. However, most bad credit loan APRs tend to average 84% and loan duration range from 6 to 60 months. NetCredit does not have a co-signer option.
The company also has no debt-to-income requirement and no minimum credit history requirement, making it a great option for those with bad credit. Its only eligibility requirement is to earn ‘steady income,’ which can be traditional employment, self-employment, or retirement benefits. Moreover, NetCredit charges 0 application fees, and there are 0 prepayment penalties. As it relates to loan origination fees – according to its website – these vary based on your state of residence. The fee doesn’t always apply, and when it does, it’s only charged if your loan is actually issued.
Moving on to refinancing, NetCredit has two options available: you can apply for a larger borrowing amount or lower your monthly payment. NetCredit provides the option at its own discretion. In your account portal, if you have an icon that says ‘I Want To Borrow More Money’ or ‘I Want To Lower My Payments,’ then you’re eligible for refinancing. If not, you must continue with the agreed-upon loan terms.
If you miss a loan payment, a $15 charge can apply if it goes 15 days past the due date. However, if you know this will occur in advance, you may qualify for a courtesy due to date adjustment – which is similar to RiseCredit’s 7-day extension. Your payment activity is reported to major credit bureaus, so that late payments will hurt your credit score. Reporting is designed to help borrowers who make full and on-time payments increase their credit score, but it can be a double-edged sword.
Another downside of NetCredit is loans are only available in select states. These include: Alabama, California, Delaware, Georgia, Idaho, Illinois, Missouri, North Dakota, New Mexico, South Carolina, South Dakota, Utah, Virginia, and Wisconsin.
High loan amounts up to $10,000.
No minimum credit score requirement.
No debt-to-income requirement.
No early repayment penalty and zero application fees.
No annual income requirement.
NetCredit offers two refinancing options to borrowers who qualify.
If you can’t make a payment, you can qualify for a courtesy due to date adjustment.
Paying in-full and on-time can help increase your credit score.
APRs can range from 34% to 155% but typically average at 84%.
There is no co-signer option.
Missed payments can hurt your credit score.
Loans are only available in Alabama, California, Delaware, Georgia, Idaho, Illinois, Missouri, North Dakota, New Mexico, South Carolina, South Dakota, Utah, Virginia, and Wisconsin.
With bad credit loans having APRs that average 84%, NetCredit is a great resource to obtain an affordable loan. And while many companies like NetCredit don’t offer to refinance, NetCredit has two options: you can increase your borrowing amount or lower your monthly payment. However, the approval is subject to the company’s decision. We recommend NetCredit to anyone who doesn’t qualify for a payday loan but is looking for a reliable lending option. With no minimum credit score, annual income, or debt-to-income requirement, NetCredit can provide solutions for borrowers in almost any financial situation.
Are Alternative Loans Actually Better than Payday Loans?
Without a doubt, alternative loans are a much better borrowing option than payday loans.
See, when you take out a payday loan, the average APR is 400%. With interest rates this high, you end up paying $45 in interest for every $300 you borrow – and that’s just over a two-week span. Moreover, if you find yourself in the unenviable position of defaulting on the loan, you can rollover the proceeds and extend the due date. However, you’ll be charged a late payment penalty. Say your $300 payday loan is extended another two-weeks: you’ll be charged a rollover fee of $45, plus another $45 fee at the end of the two-week extension period. This works out to $90 in extra fees on top of the $45 in interest.
Well, it doesn’t stop there. You also have to consider bank overdraft fees.
When a payment is charged to your checking account by the payday lender and your account doesn’t have the funds to fulfill the entire transaction – banks can charge overdraft fees that increase your out-of-pocket costs even more. The Consumer Financial Protection Bureau (CFPB) 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.
On the other hand, alternative loans are much more flexible. With payday loans, when you fall behind on your payments, the high fees keep you from paying off the principal and can send you spiraling into a vicious debt cycle. But with alternative payday loans, you have the flexibility to delay payment without incurring any penalty fees. For example, RiseCredit offers a seven day extension period if you run into any payment issues, and NetCredit employs a similar practice as well.
When Should I Get an Alternative Loan from Sites Like OppLoans, LendUp, RiseCredit, or NetCredit?
As you can see, companies like OppLoans, LendUp, RiseCredit, and NetCredit offer plenty of benefits that payday loans don’t. And even though they operate a more honorable business model – the downside is – their products are still very expensive. Because of this, we don’t recommend alternative lenders as your primary source for a loan. Remember, we only recommend alternative loans to those who don’t qualify for a personal loan because our goal is to help you avoid payday loans at all costs. But, because alternative loan APRs fall right in the middle, they’re a good option for those with extremely bad credit.
Moreover, alternative loans are much more flexible than payday loans, and their application process is often fast and easy. Alternative lenders place less weight on your credit score when quantifying your creditworthiness instead of looking at other variables like your work history, education, spending activity, and savings balance.
However, before you take out your next alternative payday loan, we have a few recommendations you should consider. If none of these work for you, then move on to alternative payday loans:
Shop around for a bad credit personal loan. There are plenty of lenders who offer unsecured loans to borrowers with bad credit. You should apply to as many companies as possible; for more help, check our list of the best personal loans for bad credit.
If you’re denied a personal loan, ask the lender why your application was rejected and see if there is another way the two of you can work together.
Ask the lender if lowering the principal will increase your chances of approval.
Next, move on to secured personal loans. When putting up collateral, even borrowers with bad credit have a high approval rate and end up with extremely competitive APRs. But in this case, you have to make sure that you can repay the loan on time because you risk losing your property.
Next, move on to a co-signer loan. It’s a great option if you can find someone willing to act as a guarantor.
Next, move on to improving your credit score; we know it takes time and effort, but lenders will eventually acknowledge your hard work.
Next, look at other options like a cash advance on your paycheck or use cash advance apps that allow you to withdraw the money you’ve earned but have yet to be paid. Also, take a look at credit unions; they typically require a one-time fee of $25, but their APRs tend to range from 18% to 28%; moreover, federal credit unions cap their APRs at 18%.
Last, try other ways to make money. You can take paid surveys; many pay between $0.50 to $1.25 per survey and take less than five minutes to complete; over the course of a few days, it can add up quickly. You can also pick up part-time work as an Uber driver or deliver food with Uber Eats; both apps allow you to sign in and out and work on your own schedule.
One last tip.
Don’t get duped by payday lenders that masquerade as alternative lenders. Since the difference between the two products is minimal, payday lenders will try and trick you into believing their product is better. Throughout this guide, we did our best to define alternative loans, but there isn’t a standardized definition. The key is to analyze the loan terms and how the company operates. By doing so, you’ll be able to tell the difference.
Are Alternative Loans Legit?
For most lenders, the answer is yes. But, it depends solely on whether the company follows state law.
See, legitimate alternative lenders adhere to state law and follow local regulations. For example, payday and car title loans are illegal in many states. And states that do allow them often cap their fees, APRs, and the maximum amount they can charge a borrower. The regulations are used to keep payday lenders from exploiting unsuspecting borrowers.
Companies can often use legal jargon or regulatory loopholes to get around certain legislation. So, before applying for a loan, make sure your lender is licensed and registered in your state. Moreover, avoid lenders that ask for prepaid credit card numbers, companies with poor Better Business Bureau (BBB) ratings, and companies that receive poor customer reviews.
If I Have Bad Credit, Can I Still Get an Unsecured Personal Loan?
It’s a common misconception that you can’t qualify for a personal loan if you have bad credit. Well, we’re here to tell you: it is possible. You just need to be persistent.
The lending market is an extremely competitive space, and with plenty of companies fighting for your business, many lenders are willing to offer unsecured loans to borrowers with bad credit. Moreover, with the modernization of credit analysis – instead of focusing solely on your credit score – lenders now take a holistic approach and examine your entire financial situation. Like we mentioned above, variables like your work history, education, spending activity, and savings balance can all be used to overcome a bad credit score.
How to Increase Your Chances of Obtaining an Unsecured Personal Loan?
Use a cosigner
A cosigner is a great way to increase your chances of obtaining a personal loan. Acting as a guarantor, a co-signer promises to pay back the debt proceeds if you default. You benefit by receiving a lower APR, and the lender benefits because a co-signer decreases the default risk. So, if you have a trusted friend who’s willing to act as a co-signer, it will definitely give your application a leg-up.
Keep bill payments current
Considering 35% of your FICO score is attributed to your payment history, staying up-to-date on your bill payments can help move your credit score in the right direction. According to the Fair Isaac Corporation (FICO), a missed payment of 30-days can result in a 90 to 110 point decrease in your credit score, with another 60 to 80 point drop if the delinquency extends another 30 days.
Keep credit card charges to less than 30% of your total balance
Accounting for 30% of your FICO Score, responsible credit utilization can positively impact your credit score. Don’t apply for new credit cards that you don’t need and pay off debt rather than just transferring it from one card to another.
Lower your debt-to-income ratio (DTI)
Increasing your income or decreasing your debt will positively affect your credit score. In a perfect world, this problem wouldn’t exist, and we know how difficult it is to apply in real-life. But try your best to develop a debt-repayment plan that you can both afford and adhere to. As well, always pay-down debt with the highest interest rate first.
Lower Your Risk Factor
Change your spending habits
When analyzing your creditworthiness, there’s a reason lenders look at your credit history and history of financial transactions. Not only are they concerned with how you repay debt, but they also want to assess how you spend your money. If a lender finds plenty of frivolous spending, this can be a red flag regarding your borrowing capacity.
Build a more predictable employment history
While a full-time job is at the top of many lenders’ checklists, they’re also concerned with your career path. Lenders are attracted to borrowers with predictable earnings. Conversely, if you change jobs frequently – moving from one industry to the next – this can be a red flag regarding your ability to repay the loan. If you were to lose your job or receive a significant reduction in hours, lenders believe you may lack the experience or track record to land an identical position.
Increase your level of education
In lenders’ eyes, education helps measure your earning potential and, more importantly, your ability to repay debt. For instance, many young borrowers – millennials – don’t have an established credit history or a significant asset-base that lenders can use to quantify their creditworthiness. As such, they use your education as a way to extrapolate your employment earnings and come with a financial profile. If you show lenders you’re taking classes or working towards certifications to increase your attractiveness in the job market, they will look at your application more favorably.
While alternative lenders may seem scary or unfamiliar, they’re a great option for those that don’t qualify for a personal loan. Remember, the goal is to avoid payday loans at all costs. They’re extremely predatory and can send you spiraling into a vicious debt cycle. And that’s precisely why we don’t promote them on our site. We fully understand the harm they cause and take great pride in keeping you off that path.
Luckily, the alternatives above allow you to obtain a reliable loan while still keeping your interest costs at a manageable level. Moreover, many of the options above offer flexible lending terms, low fees, and have zero prepayment penalties. You also benefit from an easy approval process, immediate access to funds, low annual income requirements, and sometimes zero loan origination fees.
Now, if you’ve exhausted all of your resources and still can’t obtain an affordable loan, we recommend you work on your credit score instead of settling for a payday loan. By utilizing some of our tips above, we assure you, better alternatives will eventually come your way.
On a side note, if you have experience with OppLoans, LendUp, RiseCredit, or NetCredit – we want to hear from you. How was your experience? Do you want us to review other sites like these? Join the conversation and let us know.
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