We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free – so that you can make financial decisions with confidence. The offers that appear on this site are from companies from which TheSimpleDollar.com receives compensation. This compensation may impact how and where products appear on this site including, for example, the order in which they appear. The Simple Dollar does not include all card/financial services companies or all card/financial services offers available in the marketplace. The Simple Dollar has partnerships with issuers including, but not limited to, Capital One, Chase & Discover. View our full advertiser disclosure to learn more.
Best Installment Loans for Bad Credit in 2021
The COVID-19 crisis carries serious impacts for personal finances. To help manage consumer debt, many financial institutions are temporarily reducing credit card APRs, waiving fees and offering lower interest rates on personal loans. But what happens if your credit score isn’t high enough to qualify for a loan from a traditional lender?
Installment loans for bad credit offer an alternative to help manage credit card debt, pay for emergencies or consolidate current liabilities. Here’s what you need to know about the best personal installment loans for bad credit.
The 5 best installment loans for bad credit in 2021
- Best for Easy Application: Peerform
- Best for Rate Drops: RISE Credit
- Best for Bad Credit: NetCredit
- Best for Fast Funding: OppLoans
- Best for Large Loan Amounts: Avant
Best bad credit installment loans at a glance
|Lender||APR||Terms||Loan Size||Key Benefit|
|Peerform||5.99%–29.99%||36–60 months||$4,000–$25,000||Simple application process|
|Rise Credit||50%–299%||5–26 months||$500–$5,000||Rates lower over time|
|NetCredit||34%–155%||12–60 months||$1,000–$10,000||Offers loans for low credit borrowers|
|OppLoans||99%–199%||6–36 months||$500–$4,000||Funds available the next day|
|Avant||9.95%–35.99%||24–60 months||$2,000–$35,000||Provides larger loan amounts|
[Read: Best Bad Credit Car Loans ]
What are installment loans?
Installment loans typically come with fixed terms and fixed interest rates, and the money you owe is paid back in regularly scheduled and frequent payments. If you have a “poor” credit score — less than 600 — you’ll often be rejected for personal loans from more traditional lenders, making online installment loans a solid choice.
Online installment loan companies typically work with you to assess your credit score, analyze your finances and find a payment schedule that works for you. This provides peace of mind — you get the money you need to cover unexpected expenses or pay off debts, but also have a plan to pay it back.
Top lenders that offer installment loans
One of the top lenders offering installment loans is Peerform. Users can borrow up to $25,000 with rates between 5.99% and 29.99%, and Peerform is known for its straightforward and speedy application processes. By using a peer-to-peer lending platform that splits risk among multiple funders, Peerform makes it easy to find bad credit installment loans with no collateral. Peerform is great for quick approvals, but it comes with origination fees between 1% and 5%.
RISE Credit is a great choice if you need a small loan, fast. Borrowers can access between $300 and $5,000 if they have both a steady source of income and an existing checking or savings account. Where RISE doesn’t rise to the occasion is APR: Rates vary between 50% and 299% depending on your creditworthiness, but rates can fall over time as you make consistent payments.
NetCredit offers personal installment loans with fast funding and flexible terms between one and five years. Borrowers can access up to $10,000 even with poor credit scores and APR ranges from 34% to 155%. However, rates vary by state, and in some states the highest possible rate is between 65% and 99.99%. If you can’t qualify for a traditional personal loan, NetCredit is a solid choice for bad credit installment loans — but comes with both high APR and up to 5% origination fees depending on your location.
OppLoans provide short-term personal installment loans up to $4,000 with terms up to three years. You’ll pay between 99% and 199% APR, and in many cases, your funds are available within 24 hours of approval. If you need cash — fast — and can handle the higher interest rates, OppLoans is a solid choice.
Avant lets you borrow the largest amount on our list — get up to $35,000 with an APR between 9.95% and 35.99% and terms of 24 to 60 months. You’ll also pay an administration fee of up to 4.75%, making it a costly option for long-term borrowing, but a good choice if you need to borrow large amounts with low-to-poor credit.
How to choose an installment loan
When it comes to choosing an installment loan, start with the amount you need. Ideally, you want to borrow as close to the exact amount as possible to lower the amount of interest you pay over time. It’s also worth considering APRs, origination fees and late penalties when making your decision. While some loan providers offer almost-instant approvals and cash-in-hand, high APRs mean you’re paying back far more than the original loan amount.
Term length is also important. While longer terms mean more time to pay back your loan and smaller installments each month, you’re also paying more interest over time.
How installment loans affect your credit
When you take out an installment loan, it is documented by national credit bureaus Equifax, Experian, and Transunion. Timely personal loan payments build a positive credit score over time. If you miss a payment by more than 30 days, however, the loan provider will report this to the major credit bureaus and you’re likely to see a credit score drop immediately. If you miss a payment, you could be charged a late fee depending on the lender.
How your installment loan affects your credit depends largely on how well you manage your payments. While a new loan may cause a temporary dip in your score — it can actually help you in the long term. If you use an installment loan to consolidate other debt, you will lower your debt to credit ratio.
A credit loan may also serve your credit reputation because it increases your credit mix. Credit scores tend to favor reports that have a variety of loan types, and installment loans may be favored over consumer debts like credit card balances. Paying off your loan as fast as possible will help your credit score.
Tips for getting an installment loan with bad credit
If you’re looking for an installment loan with bad credit, start by comparing several online options. Some — like Avant and Peerform — let you access substantial loan amounts while others, such as NetCredit and OppLoans, are designed for borrowers with very low credit scores.
However, if you have bad credit, there are a few things you can do to improve your chances of getting a loan.
- Improve your credit. While this is easier said than done, even 10 or 20 points’ increase in your credit score can improve your chances of approval or secure yourself a decent APR. You can also dispute any inaccurate information on your credit report, removing detrimental information and improving your credit.
- Shop around. Compare different rates that lenders offer. You can use pre-approval and pre-qualification tools on the lender’s website to get an idea of your loan term and rate before moving forward with a company. Furthermore, most of these lenders only perform a soft credit check for pre-approval and qualification, so your credit score isn’t dinged too much.
- Request only exactly what you need. If you can find a way to bridge part of the financial gap that you’re experiencing and only need a helping hand to lend you a little bit, it could improve your chances. Because borrowing a smaller amount is a smaller risk — to both you and the lender — it’s easier to get approved with decent rates.
Installment loans vs. payday loans
Installment loans and payday loans can both help in a pinch, but they differ on several key components. As a general rule, payday loans should be a last resort, while installment loans can be a wise strategy for financing and debt consolidation.
- Credit checks: Most installment loans require a credit check and payday loans don’t.
- Interest: Even with bad credit, you’re likely to pay under 100% APR on an installment loan, but it’s not uncommon for a payday loan to have a 300% or higher interest rate.
- Repayment: You can pay back an installment loan over years, but payday loans typically have to be repaid in full typically in a couple weeks or months using a check or account information you provide in advance.
Alternatives to installment loans for bad credit
- Secured credit cards: These cards require a refundable security deposit, but they don’t require a credit check.
- Emergency loans: These loans are designed for unexpected expenses and can be dispersed quickly.
- Payday Alternative Loans: These loans are offered by credit unions at much lower interest rates than payday loans.
[Read: Best Same-Day Loans ]
Things to keep in mind
While installment loans for bad credit are ideal if you need to consolidate debts or handle unexpected expenses, they also come with potential pitfalls.
The biggest is APR: Some lenders on our list have loan APRs over 150%, which means you’ll pay back substantially more over time in interest than you borrowed initially. Term length also matters. While longer terms mean more time to pay, if you’re unable to make payments partway through your term you could end up on the hook for substantial late fees or default on your loan entirely.
We welcome your feedback on this article. Contact us at firstname.lastname@example.org with comments or questions.