Best Personal Loans for Bad Credit in October 2024

Need a personal loan but worried about bad credit? Upstart provides funding to individuals with credit scores as low as 300, while Best Egg offers secured loans for better terms.

For those with a low credit score, bad credit loans from online lenders offer accessible options despite potentially higher interest rates. These loans can help consolidate debt, cover unforeseen expenses, or start new projects. Responsible management of these loans can also assist in rebuilding credit over time, leading to improved financial health.

Benzinga has compiled a list of the best personal loans for bad credit available on the market this month. Compare offers from these top financial institutions to help you find the right loan for you.

Quick Look at the Best Personal Loans for Bad Credit:

• Best for Loans with Credit Scores as Low as 300: Upstart
• Best for Fast Funding: OneMain Financial
• Best for Automatic Payments: Upgrade
• Best for Secured Loan: Best Egg
• Best for 12-month Loans: Avant
• Best for Availability in 48 States: LendingPoint

The Best Personal Loans for Bad Credit With Guaranteed Approval

This list provides options for those seeking bad credit loans, eliminating the need for extensive internet research to find suitable loans.

1. Best for Loans with Credit Scores as Low as 300: Upstart

Upstart offers personal loans to those with extremely low credit. All you need is a credit score of 300 or above to get access to a loan. You’ll find interest rates as low as 7.8%, though if your credit is down around 300, you could pay interest rates as high as 35.99%. You must have an income source to qualify for the loan and cannot use a co-signer.

In general, loan amounts range from $1,000 to help you make ends meet during a short financial hardship to $50,000 to aid in the more long-term or large challenges. The minimum amount varies by state — Georgia ($3,100), Hawaii ($2,100), Massachusetts ($7,000).

Apply for a three or five-year loan based on your estimated ability to pay it off. The prequalification process uses a soft credit check to reduce the impact on your credit score.

Why We Picked It: The ability to qualify for a loan with very low credit or insufficient credit makes this loan accessible to people who might have few options. Options for $1,000-$50,000 loans also make this creditor attractive so you don’t have to take out more than you need.

2. Best for Fast Funding: OneMain Financial

When you need money quickly, OneMain Financial can help you access funds. As long as you meet the eligibility criteria, you can get same-day loans.

The largest setback to these loans is the high interest rates. With an annual percentage rate (APR) ranging from 18% to 35.99%, the interest can add up quickly, putting you in a worse financial situation.

If you have less-than-stellar credit and need money fast, though, this personal loan is for you. Choose a loan term from 24 to 60 months. This loan company has been in business for over 100 years and is available in 44 states. With 1,300 branches nationwide, you can likely find one near you.

Why We Picked It: When you need funds quickly, OneMain Financial is a good option. It is available in 44 states, and the process is simple and easy, so you can get access to the funds you need to make ends meet.

3. Best for Automatic Payments: Upgrade

If you feel overwhelmed by managing your many payments and obligations, Upgrade can make it simple to consolidate debt with a personal loan that has automatic payments from the moment you sign on. That way, you never miss a payment and can begin to use the loan to rebuild your credit and get back to a place of financial freedom.

To get the loan, you will pay loan origination fees that range from 1.85% to 9.99%, which does make the loan costly. The annual percentage rate (APR) ranges from 9.99% to 35.99%, which makes the interest rate competitive for this loan type. You’ll need a fair credit score of 580 or higher to qualify.

Use your Upgrade personal loan to pay off creditors directly, restoring a sense of peace and calm to your life and stopping the phone calls and constant mail you receive. 

Why We Picked It: Automate your payments as part of the loan origination process and never miss a payment. Use the loan to pay off other creditors while building your credit with on-time payments as you work toward financial freedom.

4. Best for Secured Loan: Best Egg

Applying for a secured loan can help you get access to better rates and terms than you would with a standard personal loan. Even if your credit score is low, you can qualify when you have a home or car you can use as collateral for your loan. This does come with risks if you default on the loan because the collateral becomes Best Egg’s property. 

Best Egg has an A+ rating with the Better Business Bureau and excellent ratings with Trustpilot. Loans can help with debt consolidation, home improvements, vacations, credit card refinancing and more. 

The lender states a secured loan often yields an average annual percentage rate discount of 20%. The prequalification process only requires a soft credit check, which means you won’t see impacts to your credit score and can decide on a different loan should the secured option not be the best option for you.

Loan values are up to $50,000 and can be fully funded within 24 hours. The minimum loan amounts vary by state — Massachusetts ($6,500), Ohio ($5,001) and Georgia ($3,001). Annual Percentage Rates (APRs) range from 7.99% to 35.99% and origination fee of 0.99%–9.99% of the loan amount applies.

Why We Picked It: Get a lower interest rate with a secured loan. The collateral doesn’t have to be your home itself. Instead, you can use fixtures like lights, vanities or cabinets to help protect your home. 

5. Best for 12-month Loans: Avant

If you don’t like the idea of paying off your loan for 3-5 years, look into personal loan options through Avant. With loan terms starting at 24 months, you can return to your financial footing and say goodbye to debt quickly. 

Loans are available for those with a credit score of 550 or higher. Amounts range from $2,000-$35,000 and can help with any unexpected expense, such as a medical bill or home project. 

Once approved, you can access your funds as quickly as the next business day. Set up automatic payments and manage your loan through the mobile app to monitor your progress toward paying off your loan. Based on your credit and eligibility, interest rates range from 9.95% to 35.99%. Loan terms are 24-60 months.

Why We Picked It: Many loan companies only offer three- or five-year loans. But Avant makes it easier to pay off your debt quickly when you have the means to do so. It can be a wise move to consolidate debt and move on from the debt cycle in just two years.

6. Best for Availability in 48 States: LendingPoint

LendingPoint is widely available nationwide with personal loan options for those in 48 states and Washington, D.C.. Nevada and West Virginia are the only states you can’t access a LendingPoint loan. Those who qualify for the personal loan can get funded in as little as a day. 

Apply for loans of $1,000 to $36,500 with repayment terms from 24 to 72 months. Interest rates range from 7.99% to 35.99% APR. Origination fees can be as high as 10%, depending on where you live. However, if you pay off the loan early, you won’t face any penalties, which can be good if you are unsure what your finances will look like in the future.

Why We Picked It: With low credit score requirements and flexible amounts and terms, LendingPoint is a solid option for people in all areas of the U.S. except for Nevada and West Virginia.

What Are Bad Credit Loans?

A bad credit loan is offered to an applicant with minimal credit history or a poor credit score. Most lenders offer loans to individuals with a credit score of 580 or higher, but you might find some lenders willing to offer you money with a credit score below that. 

Typically, bad credit loans come with high interest rates because the lender views you as highly risky because you have not shown that you are responsible when it comes to managing your finances. Lower interest rates are available to those with better credit who meet stringent qualification requirements.

What Is a Bad Credit Score?

Credit scores fall into six ranges.

• Excellent: 800-850
• Very Good: 740-799
• Good: 670-739
• Fair: 580-669
• Poor: 300-579

Anything below good (670-739) is considered bad credit and will result in less favorable terms. 

Average Personal Loan Interest Rates by Credit Score

Learn the average personal loan interest rate other consumers receive with a similar credit score. You’ll see a sharp decline in average rates once you go from fair credit to good credit.

Bad Credit Loan Fees

Loans for applicants with bad credit include a variety of fees. Familiarize yourself with these fees before getting started with the loan process.

• Origination fees: These cover the cost of processing your loan, including the staffing to answer questions, underwriting your loan, etc. The most common origination fees for bad credit loans are 1-10% of the loan amount you’re applying for.
• Late payment fee: If you fail to make on-time payments, you can face this fee, which varies based on the lender and the agreement you sign. It could be a flat rate, such as $25, or a percentage of your loan, 5% of the remaining loan amount.
• Prepayment penalty: Your lender might charge you a fee for paying off the loan before the end of the term. Often this is reflected as a percentage of the loan balance, such as 2%.
• Non-sufficient funds fees: When the lender goes to withdraw funds for a loan payment and there are not enough funds in your account, you can face a non-sufficient funds fee. These fees range from $10-$35 typically. 

Pros and Cons of Bad Credit Loans 

Learn the pros and cons of bad credit loans. Be sure to fully evaluate the benefits and disadvantages before securing a loan to protect your finances and make the best decisions based on your situation.

How to Get a Personal Loan With Bad Credit

Don’t be disheartened if you need a personal loan but your credit score is not great. You do have options for obtaining one. Follow these tips for the best chance of qualifying for a loan.

1. Know your credit score: Start by looking at your credit score to see where you’re at and learn what you’re working with. Many credit card companies now offer your credit score as an account perk. You can also pull a credit report through one of the major credit bureaus. During this process, look for inaccuracies on your credit report and dispute anything that doesn’t look right.
2. Work on increasing your credit score: If your credit score is too low to qualify for a loan, look into ways to improve your credit. The best ways are to make on-time payments and reduce your credit use.
3. Decide your budget: Look at your monthly required expenditures and decide how much of a loan you can afford. Avoid getting into a situation where you have a new loan payment that you can’t make each month. This will further harm your credit.
4. Complete the prequalification process: Apply for your loan with multiple lenders. This will allow you to see terms based on your credit and financial situation. That way you know what you’re committing to and can see your specific rates.
5. Evaluate whether a co-signer might help: A good way to improve your loan terms is to work with a co-signer with good credit. Lenders like having a co-signer because they have someone to contact if you fail to make your agreed-upon payments.
6. Complete the application: Once you’ve decided on the best lender, complete the application and receive your loan funding.
7. Repay your loan on time: You must make timely payments to build your credit score and improve your financial situation. Autopay can help ensure you never miss a payment or are late.

Types of Loans for Bad Credit

Borrowers with bad credit have many loan type options available to them. Here’s a look at loans you might consider.

1. HELOC or Home Equity Loan

You can qualify for a lump sum loan on which you make monthly installments. Or take out a HELOC that works like a credit card where you draw money as needed. In both cases, you’ll be using your home as collateral, so be sure you have the income to repay this loan. Generally, these loans have better terms than other loan types.

2. Secured Personal Loans

A secured loan puts forth collateral to secure the loan. This collateral can be physical goods, such as a car title or a bank account. The lender can seize this property if you don’t make on-time payments. However, secured loans often include better terms than unsecured personal loans.

3. Unsecured Personal Loans

Unsecured loans do not require collateral of any kind. While you’ll pay higher interest rates for these loans, you don’t risk losing your valuables should you have challenges paying your loan.

4. Auto Loans

You can use your car title as collateral to get a personal loan. However, the lender will repossess your car if you fail to make payments. You can qualify for this loan type with low credit scores and a higher debt-to-income ratio than other loan types.

5. Payday Loans

When you just need a few hundred dollars to make ends meet, a payday loan can help. This is a commitment that you’ll repay the loan once you receive your next paycheck, making the terms only 2-4 weeks in most cases. Commonly, you don’t face a credit check for this loan type. However, the fees are extremely high on these loans and can start a cycle of debt as repaying the loan makes it challenging to meet your obligations for the next month.

Where to Get a Loan With Bad Credit

Many institutions offer loans to individuals with bad or less-than-optimal credit. Check with any of these organizations to see if you qualify for a personal loan.

• Banks
• Credit unions
• Online lenders

You should check rates with at least three providers to secure the best loan term. When your credit is less than optimal, online banks are often the most competitive because they can take greater risks than traditional banks.

How to Compare Personal Loans for Bad Credit

As you compare your options for bad credit loans, use these factors to find the best loan.

1. Compare interest rates: When your credit is poor or limited, you will likely be looking at the top end of the posted interest rates for that lender. Look at that number and decide whether that can work with your budget or beats out the interest rates you’re paying if you want to use the loan for consolidation.
2. Check with lenders that offer prequalification: Getting prequalified with a lender is ideal because it doesn’t require a hard credit check, which can impact your scores long term. Instead, a soft check will review income and details to provide a quote for what you can expect.
3. Review the fees: Interest rates are just one part of the equation for total loan cost. Some personal loan lenders charge origination fees or prepayment penalties. Factor in those expenses when calculating the total loan cost. 
4. Read customer reviews: You want to know that working with the lender will be manageable long-term since you’re committing to a relationship with them. Read how easy it is to reach the customer service team and manage your loan.

How to Identify Bad Credit Loan Scams

Tragically, many individuals and organizations take advantage of people who are struggling financially. That can result in major losses for unsuspecting borrowers. Here’s how to spot scams and avoid them.

• You’re asked to pay fees upfront: Reputable lenders include loan fees in your monthly payments. You should not be asked to pay these upfront.
• You feel pressured to move quickly: The lender should not tell you that the loan is only available for a short time or press you to make a decision.
• You learn of the lender through unsolicited offers: Phone calls, door-to-door sales or email offers are often not legitimate or trustworthy.
• Finding contact information is challenging: Legitimate lenders publish their contact information for all to see.
• No physical address: Reputable institutions have a physical address you can reference and legitimize in various places.
• The website is not secure: Look for HTTPS at the beginning of the URL. If not, you could give your information to scammers to steal your identity or use it maliciously.

Alternatives to Personal Loans for Bad Credit

Before finalizing your personal loan, consider these alternative funding options to ensure you are securing the best rates for your needs.

• Payments on large purchases: You can make payments depending on the retailer you’re purchasing from. Many offer buy now, pay later options to help make larger purchases more affordable.
• Setup a payment plan: Whether you’re facing medical bills or car repairs, you might be able to set up a payment plan to manage the expense and avoid interest on the expense so long as you make regular payments. 
• Improve your credit score: Before taking out a personal loan with high interest rates, consider whether you can improve your credit score to secure better terms. A secured credit card can help do that when you don’t qualify for other forms of credit.
• Ask friends and family for help: Seek support from those around you. While no one likes asking loved ones for money, this can be a far better option than taking out a loan.

Turn Around Your Finances and Build Your Credit

A personal loan can help you transform your finances by consolidating debt at a lower interest rate. On-time payments can build your credit and help you improve your finances long-term. Read all terms before signing the loan agreement and review your budget to ensure you can make payments to avoid digging deeper into a financial situation you can’t escape.

Frequently Asked Questions