Best Personal Loans for Bad Credit in 2020

If you have bad credit, qualifying for a personal loan is not easy, if not impossible without turning to a high-interest payday loan. However, it’s just not true and many lenders will approve borrowers with bad credit.

You may have limited options and it can take a bit more time to qualify, but you still have choices at your disposal. If you need a loan to consolidate debt, pay off a large purchase or fund improvements to your home, take a look at the six best loans for bad credit of 2020.

Filter & Sort

Check Your Personal Loan Rates

with our trusted partner's at Bankrate.com

Answer a few questions to see which personal loans you pre-qualify for. It's quick and easy, and it will not impact your credit score.

LENDING PARTNER
APR FROM
TERM
MAX LOAN AMOUNT

The 6 Best Loans for Bad Credit of 2020

APR Loan Amount Terms Key Benefit
OneMain Financial 18.00% – 35.99% Up to $50,000 Up to 60 months Same-day funding.
Peerform 5.99% – 29.99% $4,000 – $25,000 3 years Easy application process.
NetCredit 34.99% – 155% Up to $10,000 6 – 60 months Low credit scores accepted.
Avant 9.95% – 35.99% $2,000 – $35,000 24 – 60 months Mobile application process available.
PersonalLoans.com 5.99% – 35.99% Up to $35,000 90 days – 72 months Short-term loans available if needed.
BadCreditLoans.com 5.99% – 35.99% $500 – $5,000 3 – 36 months Large affiliate network to fund your loan.

The 6 best bad credit loans of 2020

OneMain Financial – Best for emergency funding

When you’re in need of money for an emergency, OneMain Financial provides last-minute loans, approved in as little as ten minutes.

Interest rate: 18.00% – 35.99%

Terms: Up to 60 months

Loan amount: Up to $50K

SimpleScore: 4.4/5

Check Rates on Bankrate’s secure website

OneMain Financial provides a variety of personal loans for all types of borrowers. Consumers with lower credit scores may not be able to qualify for all of OneMain Financial’s credit products, but will find products tailored to meet their needs. OneMain provides bad credit loans that consider other factors besides credit score. Furthermore, a borrower can put up a car, truck or other assets as collateral to qualify.

Our Two Cents: OneMain Financial’s fast funding makes it easy for borrowers to get the money they need to cover an unexpected emergency. However, its lowest APR on a personal loan is a whopping 18%, making it hard to save on interest costs.

OneMain Disclosure

Peerform – Best peer-to-peer lending

Raise the odds of getting approved — your loan is funded by investors who monitor and choose loans to fund from Peerform.

Interest rate: 5.99% – 29.99%

Terms: Up to 3 years

Loan amount: $4K to $25K

SimpleScore: 3.8/5

If you need a bad credit loan option and your credit score is poor but not outright terrible, Peerform is a lender you may want to consider. It’s a peer-to-peer lending platform, meaning borrowers are matched with individuals willing to lend money. It’s an interesting concept that takes traditional banks out of the equation and can sometimes offer lower fees due to reduced overhead.

Be mindful of the fact that Peerform will decline any application with a credit score below 600, which is all the more reason to raise your credit score. Because of this criteria, Peerform is able to offer loans ranging from $4,000 to $25,000 to potential borrowers with APRs ranging from 5.99% to 40%. One of the downsides to using Peerform is that it can take up to two weeks to receive funding. So, if you need cash fast, this may not be the best platform for you. Additionally, there is a 1% to 5% origination fee attached to the loan.

Our Two Cents: Peer-to-peer lending isn’t just for people with good credit, and Peerform makes that clear. With a wide network of investors to fund your loan, it can be easy to get quick cash, but watch out for origination fees.

NetCredit – Best for building credit

Even if you have less than perfect credit, NetCredit will consider approving you for a loan quickly.

Interest rate: 34.99% – 155%

Terms: 6 – 60 months

Loan amount: Up to $10K

SimpleScore: 3.2/5

The good thing about NetCredit is it looks beyond just your credit score, sometimes accepting applications with scores as low as 550. Further, NetCredit has a suite of tools and guarantees that provide transparency and ease-of-use for customers, even allowing borrowers to return the loan the day after funding if they change their minds.

Its loans range from $1,000 to $10,000 with APRs starting around 34% — and in some cases ranging as high as 155%. If your offer comes with an extremely high APR like that, look into other options, such as a secured loan or using a cosigner. You could easily find a better bad credit loan elsewhere.

Our Two Cents: Despite a high maximum APR, NetCredit still takes care of its borrowers with bad credit, leveraging transparency and refunds to make the borrowing process easier. Additionally, using a cosigner can help get you a better rate.

Avant – Best mobile app

Complete a loan application online or by using the mobile app for next business day funding.

Interest rate: 9.99% – 35.99%

Terms: 24 – 60 months

Loan amount: $2K to $35K

SimpleScore: 3.8/5

Check Rates on Bankrate’s secure website

Avant focuses on loans for borrowers with average credit — customers with a credit score between 600 and 700. If you fall in that range, Avant is good if you need your funds quickly, as you may get your loan as soon as the next business day after you apply. Avant also makes its customer support team available seven days a week, meaning customers can reach out and ask questions, even on a Sunday morning.

Loans from Avant range from $2,000 to $35,000 with APRs between 9.95% and 35.99% which is reasonable compared to other loans for people with bad credit. Furthermore, the loan terms offered are between 24 to 60 months. However, you should also be aware of an administration fee charged for loan origination that is 1.50% to 4.75% of the loan itself.

Our Two Cents: Avant’s mobile app allows borrowers to access their loan details on the go, and even contact customer support. For tech-savvy customers, this is makes borrowing much easier.

PersonalLoans.com – Best bad credit lender marketplace

When you don’t qualify for a loan, try the peer to peer service as a lending alternative to broaden your borrowing options.

Interest rate: 5.99% – 35.99%

Terms: Up to 72 months

Loan amount: $1K to $35K

SimpleScore: 4/5

After completing just one online application, PersonalLoans.com will search its network of lenders to find one that matches your needs and financial situation. When the results return, you have to do a little extra research to find the best one for you. Be sure to read the terms and agreements of each offer, as they could all differ from one another.

APRs are competitive and there are several types of loans, which top out at a generous $35,000. Of course, this is a referral site, so your terms, fees, and APRs will vary depending on the lenders who contact you. This kind of information can be easier to determine with a direct lender.

Our Two Cents: Although it would be easier to borrow from a direct lenders, PersonalLoans.com will do the research legwork for borrowers who don’t know where to turn. Be sure to do the last stretch of research on the lenders PersonalLoans.com brings back from its search.

BadCreditLoans.com – Best for really bad credit

Badcreditloans.com is one of the oldest personal loans for bad credit providers.

Interest rate: 5.99% – 35.99%

Terms: 3 – 36 months

Loan amount: $500 to $5K

SimpleScore: 3.6/5

When it comes to getting a loan with really, really bad credit, your options are limited. But BadCreditLoans.com is a site that has been connecting borrowers with poor credit to a network of willing lenders since 1998. Once you apply, you’ll receive offers from a network of lenders. You can choose which offer is best for you and your financial situation before moving forward in the process.

Keep in mind that depending on your situation, you may not receive any offers. On the other hand, you can reject any offer that doesn’t fit your needs. Once you accept an offer, typical loan amounts range from $500 to $5,000 with an APR of anywhere from 5.99% to 35.99%, according to its website. The repayment terms generally range from three to 36 months. Although the 35.99% APR can seem daunting, it’s better than a predatory payday loan.

Our Two Cents: Because having really bad credit is bad enough, BadCreditLoans.com eases your worries about getting a loan. However, a low cap of $5,000 may not be enough to bridge the financial gap.

How do personal loans work

Personal loans are a lump sum of money issued by a lender and deposited into your bank account. You are required to pay back the loan at a fixed interest rate over a fixed period of time. In 2018, Transunion’s Q4 Industry Insights Report found balances on personal loans increased $21 billion, to close the year at a record high of $138 billion.

Loan terms vary from one lender to the next, but typically range from two to seven years. Personal loans can be secured or unsecured. Unsecured is the most common type of personal loan. Secured loans require you to offer up collateral or an asset, which can be used in case you can’t repay the loan. Like most loans, personal loans also come with interest tacked on to the loan amount, which also varies.

APRs

What is a good APR?

APR or Annual Percentage Rate is the annual rate of interest charged to borrowers. In part, it’s based on the prevailing interest rate at any given time. For the second quarter of 2019, the average interest rate on a personal loan was 9.41%, according to Experian. It’s also determined by a consumer’s credit score and financial history. Personal loan rates range from about 6% up to 36% on average, with lower percentages the most ideal.

What’s the difference between fixed and variable APR?

A fixed APR means the interest rate on your personal loan stays the same until the term is over. If you have a fixed rate of 5.99% on your loan, it will remain 5.99% until you make your last payment. Conversely, if you have a variable APR, the interest rate will fluctuate based on the prime lending rate — the lowest rate your bank can charge its customers to borrow money.

How has this changed with Coronavirus?

The Coronavirus has changed many financial areas and APRs, personal loans and payback times no exception. For example, U.S. Bank is offering personal loans of $1,000 to $4,999 at 2.99% APR for all eligible borrowers. Likewise, HSBC Bank is deferring personal loan payments and waiving late fees for 120 days from the time you enroll in HSBC’s hardship program.

Many online lenders are also offering help to people affected by COVID-19. LendingClub is allowing customers to defer two months of payments when they apply for a payment plan. The company is also not charging late fees or reporting late payments to credit bureaus.

What’s a secured vs unsecured loan?

An unsecured personal loan is the most common type of personal loan. An unsecured loan does not require you to offer up collateral or an asset to secure the loan. Secured loans require collateral to be used in case you can’t pay back the loan. Some lenders will require borrowers with fair to bad credit to secure a personal loan with some type of collateral because the bank or lender is at greater risk of not getting paid back.

When to use secured loan vs. unsecured loan?

You can typically borrow larger amounts of money at lower rates with a secured loan since lenders are more confident it won’t lose money if you can’t pay back your loan. Sometimes it can be more difficult to get approved for an unsecured personal loan. Unsecured loans also often come with less favorable terms and a higher interest rate than secured loans. But if you have good credit and a history of paying off debt on time, unsecured personal loans are favorable to putting up collateral.

Check Your Personal Loan Rates

Answer a few questions to see which personal loans you pre-qualify for. The process is quick and easy, and it will not impact your credit score.

Coronavirus (COVID-19) Financial Wellness Resources

Best time to obtain personal loans for bad credit

Most lenders offer the best rates and terms to people with good credit. If you have bad credit or no credit at all, then the best time to obtain a personal loan is when you’ve repaired your credit by paying down debt and making repayments on other debt, like credit cards.

If you have good credit, then the best time to obtain a loan is when you need it, as well as to pay down other high-interest debt, consolidate debt, pay off student loans and remodel your home.

Jeff Zhou with FigLoans says, “The biggest problem with bad credit is what we call the catch-22: you have to get a loan to build credit, but you need good credit to get a loan. It’s hard to find a loan with bad credit, but that does not mean payday loans are the solution for your emergency cash needs. Payday loans advertise themselves as a quick fix, but are often designed to trap borrowers in debt. Hidden costs in the fine print make payday loans exceptionally dangerous.”

What are the uses for a personal loan?

Personal loans can be used for a wide variety of things, including:

  • Paying off high-interest credit card debt
  • Debt consolidation
  • Home improvement
  • Paying off medical bills
  • Unexpected emergencies
  • Cover moving expenses
  • Pay for your wedding

When to avoid personal loans

Personal loans have to be paid back with interest. You may not want to take out a loan if you simply can’t afford the payments. If your credit is poor, you’ll end up spending a higher interest rate, so if you can, it’s best to avoid a personal loan until your credit is repaired. Most experts will also agree that taking out a loan for luxury items like jewelry or a dream vacation is not recommended.

If you have other loans that you’ve defaulted on or have gone through a recent bankruptcy, you may not want to add to your problems by applying for another loan. In fact, most lenders won’t qualify you for a personal loan if you’ve had a bankruptcy.

Best ways to obtain personal loans for bad credit

Andrew Roderick, CEO of Credit Repair Companies, offers this advice for the best way to obtain a personal loan for bad credit.

“When looking for a bad credit loan in 2020, it’s very important to find one that best suits you. There are straightforward payday loans, which usually have a higher percentage rate for pay back, but can easily get you through a couple of months. But they should only be used if you are sure your income is secure for the next couple of months, especially at these trying times, or you could face extremely high charges only making your situation worse.”

Shopping around and getting prequalified by multiple lenders does not usually impact your credit score and lets you compare APRs and help ensure you get the best rate. And, if you want to save on your loan over time, you can make more frequent payments or pay more than the set amount each month.

Check Your Personal Loan Rates

Answer a few questions to see which personal loans you pre-qualify for. The process is quick and easy, and it will not impact your credit score.

FAQ

What are personal loans?

Personal loans are issued by a lender and deposited into your bank account. They are to be paid back over a fixed period of time at a fixed APR.

How do you apply for a personal loan?

Today, it’s easy to apply for a personal loan online. Even many banks and credit unions offer the ability to apply online in minutes.

How can I fix my credit?

There are many ways to fix your credit, but one of the best is to pay off credit card debt or other loans on time and as written in your loan contract. At the same time you’re paying off high-interest debt, not taking on more debt is ideal.

Do I need collateral?

Most personal loans are unsecured. But, if you have bad credit, you may only qualify for a secured loan, which is secured by an asset or collateral.

Can I get a loan if I’m unemployed?

It depends on the lender. Most often lenders will look at employment history when approving you for a loan. However, the biggest consideration is your credit score. If you have a long employment history and good credit, you may qualify for a personal loan. But, it may have to be secured by collateral so your lender knows it will be paid back.

The bottom line

The best personal loans for bad credit may take time to get, but if you need money for consolidating other high-interest debt, paying for a wedding, hospital bills or many other things, they can be a good solution for many people. Personal loans come in a range of APRs and terms to meet your needs, and can be found online or down the street at your local bank. If you have bad credit, it’s best to repair that first before taking on more debt.

Methodology

The SimpleScore was created with you in mind, to simplify the process of making complex personal loan decisions, for your peace-of-mind – and wallet. We rated top personal lenders based on five different categories: interest rates, terms, amount, transparency and fees.
We also lean on our editorial expertise and industry knowledge to help choose and rank each company. Our ratings are meant to be a directional and helpful tool to help you in the process of choosing a personal loan provider. Be sure to continue your research and shop around for the best personal loan that fits your specific needs.

Editorial Note: Compensation does not influence our recommendations. However, we may earn a commission on sales from the companies featured in this post. To view a list of partners, click here. Opinions expressed here are the author's alone, and have not been reviewed, approved or otherwise endorsed by our advertisers. Reasonable efforts are made to present accurate info, however all information is presented without warranty. Consult our advertiser's page for terms & conditions.

Best Personal Loans for Bad Credit in 2020

If you have bad credit, qualifying for a personal loan is not easy, if not impossible without turning to a high-interest payday loan. However, it’s just not true and many lenders will approve borrowers with bad credit.

You may have limited options and it can take a bit more time to qualify, but you still have choices at your disposal. If you need a loan to consolidate debt, pay off a large purchase or fund improvements to your home, take a look at the six best loans for bad credit of 2020.

Filter & Sort

Check Your Personal Loan Rates

with our trusted partner's at Bankrate.com

Answer a few questions to see which personal loans you pre-qualify for. It's quick and easy, and it will not impact your credit score.

LENDING PARTNER
APR FROM
TERM
MAX LOAN AMOUNT

The 6 Best Loans for Bad Credit of 2020

APR Loan Amount Terms Key Benefit
OneMain Financial 18.00% – 35.99% Up to $50,000 Up to 60 months Same-day funding.
Peerform 5.99% – 29.99% $4,000 – $25,000 3 years Easy application process.
NetCredit 34.99% – 155% Up to $10,000 6 – 60 months Low credit scores accepted.
Avant 9.95% – 35.99% $2,000 – $35,000 24 – 60 months Mobile application process available.
PersonalLoans.com 5.99% – 35.99% Up to $35,000 90 days – 72 months Short-term loans available if needed.
BadCreditLoans.com 5.99% – 35.99% $500 – $5,000 3 – 36 months Large affiliate network to fund your loan.

The 6 best bad credit loans of 2020

OneMain Financial – Best for emergency funding

When you’re in need of money for an emergency, OneMain Financial provides last-minute loans, approved in as little as ten minutes.

Interest rate: 18.00% – 35.99%

Terms: Up to 60 months

Loan amount: Up to $50K

SimpleScore: 4.4/5

Check Rates on Bankrate’s secure website

OneMain Financial provides a variety of personal loans for all types of borrowers. Consumers with lower credit scores may not be able to qualify for all of OneMain Financial’s credit products, but will find products tailored to meet their needs. OneMain provides bad credit loans that consider other factors besides credit score. Furthermore, a borrower can put up a car, truck or other assets as collateral to qualify.

Our Two Cents: OneMain Financial’s fast funding makes it easy for borrowers to get the money they need to cover an unexpected emergency. However, its lowest APR on a personal loan is a whopping 18%, making it hard to save on interest costs.

OneMain Disclosure

Peerform – Best peer-to-peer lending

Raise the odds of getting approved — your loan is funded by investors who monitor and choose loans to fund from Peerform.

Interest rate: 5.99% – 29.99%

Terms: Up to 3 years

Loan amount: $4K to $25K

SimpleScore: 3.8/5

If you need a bad credit loan option and your credit score is poor but not outright terrible, Peerform is a lender you may want to consider. It’s a peer-to-peer lending platform, meaning borrowers are matched with individuals willing to lend money. It’s an interesting concept that takes traditional banks out of the equation and can sometimes offer lower fees due to reduced overhead.

Be mindful of the fact that Peerform will decline any application with a credit score below 600, which is all the more reason to raise your credit score. Because of this criteria, Peerform is able to offer loans ranging from $4,000 to $25,000 to potential borrowers with APRs ranging from 5.99% to 40%. One of the downsides to using Peerform is that it can take up to two weeks to receive funding. So, if you need cash fast, this may not be the best platform for you. Additionally, there is a 1% to 5% origination fee attached to the loan.

Our Two Cents: Peer-to-peer lending isn’t just for people with good credit, and Peerform makes that clear. With a wide network of investors to fund your loan, it can be easy to get quick cash, but watch out for origination fees.

NetCredit – Best for building credit

Even if you have less than perfect credit, NetCredit will consider approving you for a loan quickly.

Interest rate: 34.99% – 155%

Terms: 6 – 60 months

Loan amount: Up to $10K

SimpleScore: 3.2/5

The good thing about NetCredit is it looks beyond just your credit score, sometimes accepting applications with scores as low as 550. Further, NetCredit has a suite of tools and guarantees that provide transparency and ease-of-use for customers, even allowing borrowers to return the loan the day after funding if they change their minds.

Its loans range from $1,000 to $10,000 with APRs starting around 34% — and in some cases ranging as high as 155%. If your offer comes with an extremely high APR like that, look into other options, such as a secured loan or using a cosigner. You could easily find a better bad credit loan elsewhere.

Our Two Cents: Despite a high maximum APR, NetCredit still takes care of its borrowers with bad credit, leveraging transparency and refunds to make the borrowing process easier. Additionally, using a cosigner can help get you a better rate.

Avant – Best mobile app

Complete a loan application online or by using the mobile app for next business day funding.

Interest rate: 9.99% – 35.99%

Terms: 24 – 60 months

Loan amount: $2K to $35K

SimpleScore: 3.8/5

Check Rates on Bankrate’s secure website

Avant focuses on loans for borrowers with average credit — customers with a credit score between 600 and 700. If you fall in that range, Avant is good if you need your funds quickly, as you may get your loan as soon as the next business day after you apply. Avant also makes its customer support team available seven days a week, meaning customers can reach out and ask questions, even on a Sunday morning.

Loans from Avant range from $2,000 to $35,000 with APRs between 9.95% and 35.99% which is reasonable compared to other loans for people with bad credit. Furthermore, the loan terms offered are between 24 to 60 months. However, you should also be aware of an administration fee charged for loan origination that is 1.50% to 4.75% of the loan itself.

Our Two Cents: Avant’s mobile app allows borrowers to access their loan details on the go, and even contact customer support. For tech-savvy customers, this is makes borrowing much easier.

PersonalLoans.com – Best bad credit lender marketplace

When you don’t qualify for a loan, try the peer to peer service as a lending alternative to broaden your borrowing options.

Interest rate: 5.99% – 35.99%

Terms: Up to 72 months

Loan amount: $1K to $35K

SimpleScore: 4/5

After completing just one online application, PersonalLoans.com will search its network of lenders to find one that matches your needs and financial situation. When the results return, you have to do a little extra research to find the best one for you. Be sure to read the terms and agreements of each offer, as they could all differ from one another.

APRs are competitive and there are several types of loans, which top out at a generous $35,000. Of course, this is a referral site, so your terms, fees, and APRs will vary depending on the lenders who contact you. This kind of information can be easier to determine with a direct lender.

Our Two Cents: Although it would be easier to borrow from a direct lenders, PersonalLoans.com will do the research legwork for borrowers who don’t know where to turn. Be sure to do the last stretch of research on the lenders PersonalLoans.com brings back from its search.

BadCreditLoans.com – Best for really bad credit

Badcreditloans.com is one of the oldest personal loans for bad credit providers.

Interest rate: 5.99% – 35.99%

Terms: 3 – 36 months

Loan amount: $500 to $5K

SimpleScore: 3.6/5

When it comes to getting a loan with really, really bad credit, your options are limited. But BadCreditLoans.com is a site that has been connecting borrowers with poor credit to a network of willing lenders since 1998. Once you apply, you’ll receive offers from a network of lenders. You can choose which offer is best for you and your financial situation before moving forward in the process.

Keep in mind that depending on your situation, you may not receive any offers. On the other hand, you can reject any offer that doesn’t fit your needs. Once you accept an offer, typical loan amounts range from $500 to $5,000 with an APR of anywhere from 5.99% to 35.99%, according to its website. The repayment terms generally range from three to 36 months. Although the 35.99% APR can seem daunting, it’s better than a predatory payday loan.

Our Two Cents: Because having really bad credit is bad enough, BadCreditLoans.com eases your worries about getting a loan. However, a low cap of $5,000 may not be enough to bridge the financial gap.

How do personal loans work

Personal loans are a lump sum of money issued by a lender and deposited into your bank account. You are required to pay back the loan at a fixed interest rate over a fixed period of time. In 2018, Transunion’s Q4 Industry Insights Report found balances on personal loans increased $21 billion, to close the year at a record high of $138 billion.

Loan terms vary from one lender to the next, but typically range from two to seven years. Personal loans can be secured or unsecured. Unsecured is the most common type of personal loan. Secured loans require you to offer up collateral or an asset, which can be used in case you can’t repay the loan. Like most loans, personal loans also come with interest tacked on to the loan amount, which also varies.

APRs

What is a good APR?

APR or Annual Percentage Rate is the annual rate of interest charged to borrowers. In part, it’s based on the prevailing interest rate at any given time. For the second quarter of 2019, the average interest rate on a personal loan was 9.41%, according to Experian. It’s also determined by a consumer’s credit score and financial history. Personal loan rates range from about 6% up to 36% on average, with lower percentages the most ideal.

What’s the difference between fixed and variable APR?

A fixed APR means the interest rate on your personal loan stays the same until the term is over. If you have a fixed rate of 5.99% on your loan, it will remain 5.99% until you make your last payment. Conversely, if you have a variable APR, the interest rate will fluctuate based on the prime lending rate — the lowest rate your bank can charge its customers to borrow money.

How has this changed with Coronavirus?

The Coronavirus has changed many financial areas and APRs, personal loans and payback times no exception. For example, U.S. Bank is offering personal loans of $1,000 to $4,999 at 2.99% APR for all eligible borrowers. Likewise, HSBC Bank is deferring personal loan payments and waiving late fees for 120 days from the time you enroll in HSBC’s hardship program.

Many online lenders are also offering help to people affected by COVID-19. LendingClub is allowing customers to defer two months of payments when they apply for a payment plan. The company is also not charging late fees or reporting late payments to credit bureaus.

What’s a secured vs unsecured loan?

An unsecured personal loan is the most common type of personal loan. An unsecured loan does not require you to offer up collateral or an asset to secure the loan. Secured loans require collateral to be used in case you can’t pay back the loan. Some lenders will require borrowers with fair to bad credit to secure a personal loan with some type of collateral because the bank or lender is at greater risk of not getting paid back.

When to use secured loan vs. unsecured loan?

You can typically borrow larger amounts of money at lower rates with a secured loan since lenders are more confident it won’t lose money if you can’t pay back your loan. Sometimes it can be more difficult to get approved for an unsecured personal loan. Unsecured loans also often come with less favorable terms and a higher interest rate than secured loans. But if you have good credit and a history of paying off debt on time, unsecured personal loans are favorable to putting up collateral.

Check Your Personal Loan Rates

Answer a few questions to see which personal loans you pre-qualify for. The process is quick and easy, and it will not impact your credit score.

Coronavirus (COVID-19) Financial Wellness Resources

Best time to obtain personal loans for bad credit

Most lenders offer the best rates and terms to people with good credit. If you have bad credit or no credit at all, then the best time to obtain a personal loan is when you’ve repaired your credit by paying down debt and making repayments on other debt, like credit cards.

If you have good credit, then the best time to obtain a loan is when you need it, as well as to pay down other high-interest debt, consolidate debt, pay off student loans and remodel your home.

Jeff Zhou with FigLoans says, “The biggest problem with bad credit is what we call the catch-22: you have to get a loan to build credit, but you need good credit to get a loan. It’s hard to find a loan with bad credit, but that does not mean payday loans are the solution for your emergency cash needs. Payday loans advertise themselves as a quick fix, but are often designed to trap borrowers in debt. Hidden costs in the fine print make payday loans exceptionally dangerous.”

What are the uses for a personal loan?

Personal loans can be used for a wide variety of things, including:

  • Paying off high-interest credit card debt
  • Debt consolidation
  • Home improvement
  • Paying off medical bills
  • Unexpected emergencies
  • Cover moving expenses
  • Pay for your wedding

When to avoid personal loans

Personal loans have to be paid back with interest. You may not want to take out a loan if you simply can’t afford the payments. If your credit is poor, you’ll end up spending a higher interest rate, so if you can, it’s best to avoid a personal loan until your credit is repaired. Most experts will also agree that taking out a loan for luxury items like jewelry or a dream vacation is not recommended.

If you have other loans that you’ve defaulted on or have gone through a recent bankruptcy, you may not want to add to your problems by applying for another loan. In fact, most lenders won’t qualify you for a personal loan if you’ve had a bankruptcy.

Best ways to obtain personal loans for bad credit

Andrew Roderick, CEO of Credit Repair Companies, offers this advice for the best way to obtain a personal loan for bad credit.

“When looking for a bad credit loan in 2020, it’s very important to find one that best suits you. There are straightforward payday loans, which usually have a higher percentage rate for pay back, but can easily get you through a couple of months. But they should only be used if you are sure your income is secure for the next couple of months, especially at these trying times, or you could face extremely high charges only making your situation worse.”

Shopping around and getting prequalified by multiple lenders does not usually impact your credit score and lets you compare APRs and help ensure you get the best rate. And, if you want to save on your loan over time, you can make more frequent payments or pay more than the set amount each month.

Check Your Personal Loan Rates

Answer a few questions to see which personal loans you pre-qualify for. The process is quick and easy, and it will not impact your credit score.

FAQ

What are personal loans?

Personal loans are issued by a lender and deposited into your bank account. They are to be paid back over a fixed period of time at a fixed APR.

How do you apply for a personal loan?

Today, it’s easy to apply for a personal loan online. Even many banks and credit unions offer the ability to apply online in minutes.

How can I fix my credit?

There are many ways to fix your credit, but one of the best is to pay off credit card debt or other loans on time and as written in your loan contract. At the same time you’re paying off high-interest debt, not taking on more debt is ideal.

Do I need collateral?

Most personal loans are unsecured. But, if you have bad credit, you may only qualify for a secured loan, which is secured by an asset or collateral.

Can I get a loan if I’m unemployed?

It depends on the lender. Most often lenders will look at employment history when approving you for a loan. However, the biggest consideration is your credit score. If you have a long employment history and good credit, you may qualify for a personal loan. But, it may have to be secured by collateral so your lender knows it will be paid back.

The bottom line

The best personal loans for bad credit may take time to get, but if you need money for consolidating other high-interest debt, paying for a wedding, hospital bills or many other things, they can be a good solution for many people. Personal loans come in a range of APRs and terms to meet your needs, and can be found online or down the street at your local bank. If you have bad credit, it’s best to repair that first before taking on more debt.

Methodology

The SimpleScore was created with you in mind, to simplify the process of making complex personal loan decisions, for your peace-of-mind – and wallet. We rated top personal lenders based on five different categories: interest rates, terms, amount, transparency and fees.
We also lean on our editorial expertise and industry knowledge to help choose and rank each company. Our ratings are meant to be a directional and helpful tool to help you in the process of choosing a personal loan provider. Be sure to continue your research and shop around for the best personal loan that fits your specific needs.

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