Best personal loans for bad credit of 2024

If you have bad credit, you’ll probably find it difficult to secure a personal loan from a bank or some online lenders. This is especially true when interest rates are high, which has been the case since late 2023 when the Fed opted to keep rates at their highest level in 22 years.

However, some providers cater to bad and fair credit borrowers. While some of these options come with steep APRs, others cap rates at 35.99% — or don’t charge any interest or financing fees at all. Here’s a closer look at the top 7 options.

What is a bad credit loan?

Bad credit loans are designed for borrowers with a poor credit history or those who haven’t established a credit history yet. These loans cater to people with credit scores between 300 and 580 but have regular income from a job or another source, like Social Security payments or child support.

Bad credit personal loans are available from lenders like Upgrade, Upstart, OneMain Financial and Avant. These lenders cap their rates at 35.99% and charge origination fees up to 12%. However, you may get a better rate by using a cosigner or pledging collateral. Bad credit loans are also available from installment and payday lenders, but APRs can hit the triple digits with these options.

If you just need a few hundred dollars, consider a cash advance app instead of a personal or installment loan. Cash advance apps like MoneyLion, Brigit and Dave offer cash advances from $250 and up — but with 0% interest and no financing fees.

7 best loans for bad credit

• Best overall: OneMain Financial
• Best for building credit: Upstart
• Best for no credit check loans: OppLoans
• Best for quick cash advances: Moneylion
• Best for comparing rates: Monevo
• Best for peer-funded short-term loans: SoLo Funds
• Best for installment loans: NetCredit

Best overall

Best for building credit

Best no credit check loans

Best for quick cash advances

Best for comparing rates

Best for peer-funded short-term loan

Best installment loan: NetCredit

How we picked these providers

Finder’s lending experts compared over 220 personal loan, cash advance app and installment loan providers to bring you this list of the best bad credit loans. We compared lenders across the following metrics when selecting this list:

• Cost, including the APR and fees
• Requirements, including the minimum credit score
• Loan amounts available
• Repayment terms
• Application process, including how long it takes to receive your funds
• Customer ratings from sites like the Better Business Bureau and Trustpilot

In choosing these lenders, we prioritized personal loans that accept bad credit and cash advance apps over installment loan providers – as these are often cheaper in the long run.

Why is it so hard to get a loan with bad credit in 2024?

The high federal funds rate, or fed rate, rate is the main reason it’s so hard to get a loan with bad credit right now. The fed rate is the interest rate that banks have to pay to borrow the money that they lend out. Lenders then pass that cost off to the consumer by including it in the annual percentage rate, or APR, which represents the interest and fees borrowers pay over one year.

In addition to the fed rate, lenders base your APR on how likely it thinks you are to repay the loan on time. If you have a low credit score, that signals to the lender that you’ve either missed payments in the past or don’t have the track record to prove you’re a reliable borrower.

However, most states don’t allow lenders to charge rates over 36% on personal loans. When rates are low, lenders are able to make enough money from the high interest rates to offset the risk. But when the fed rate is high, that 36% APR cap shrinks their profits and most lenders respond by raising their credit score requirements. This means that if you could have qualified for a 36% APR loan back in 2022, when rates were low, you likely won’t qualify now.

How to get a loan with bad credit

Getting a loan with bad credit is similar to finding any type of loan. You want to compare lenders with eligibility criteria you meet and find the best rate and terms for your budget.

Follow these six steps to find the best loan for your situation:

1. Check your credit score. Request a copy of your credit report to make sure your credit history is accurate and get an estimate of your current credit score.
2. Compare lenders. Compare lenders that accept borrowers with your credit score. Or, use a connection service to help you find a provider. Make sure you meet any requirements like minimum annual income, debt-to-income ratio requirements and residency in an eligible state — bad credit lenders often don’t serve all 50 states.
3. Compare APRs & fees. Look at the APR to quickly compare the cost each year. Look at the origination fee to compare the upfront cost of a loan. Also ask if the lender adds the origination fee to the loan or subtracts it from your funds.
4. Prequalify. Fill out a prequalification form with your top choices or call and ask for a quote. If you use a connection service, you’ll already be prequalified with the lenders you’re connected with.
5. Complete the application. Fill out the full application for the lender you decide to apply with and provide any required documents. This will involve a hard credit check.
6. Review and sign your final loan offer. If you’re using the loan to consolidate debt, your lender may send the loan proceeds directly to your creditors.

If you have a CD or other assets you can put up as collateral, consider getting a secured loan. Secured personal loans tend to offer lower rates and fees than unsecured loans. In some cases, collateral can help make up for a bad credit score.

How to get a loan with no credit

Cash advance apps and installment loan providers may be your main options if you don’t have a credit history, but there are some alternatives worth considering. For example, Kora offers small-dollar loans to college students with no credit history.

Some lenders, like Upstart, may be willing to work with folks who haven’t built up their credit profile but show the potential to repay on time. To get approved, you need to show that you have regular income or will soon – for example, by graduating from a high-paying field or with a job offer letter and start date. However, these providers prefer to work with borrowers that have at least some positive credit history, ideally with a credit score above 660.

7 types of bad credit financing

Here are seven different options that can help you secure the cash you need – even if your credit is less than perfect.

Secured personal loans

A secured personal loan is a loan that you back with an asset as collateral, like a car or Certificate of Deposit (CD). Using collateral reduces the risk for the lender, meaning that you can qualify for a lower rate than you’d receive otherwise. But the downside is that you could lose your asset if you can’t pay the loan back.

These are most commonly available at credit unions, though some online lenders like OneMain Financial also offer secured personal loans. Typically you can borrow up to 80% or 100% of your collateral’s value, with rates from 6% to 36% and repayment terms from one to seven years.

Unsecured personal loan with a cosigner

An unsecured personal loan is a personal loan that doesn’t require collateral. Typically you can borrow between $2,000 and $50,000 with terms of 3 to 7 years and rates from 6% to 36%.

The vast majority of personal loans are unsecured, which is why there are so few options for people with bad credit — without collateral, bad credit borrowers are too much of a risk. That’s why bad credit borrowers may need to bring on a cosigner, or someone with good credit who agrees to repay the loan if you default.

However, lenders that accept cosigners are few and far between. Most accept coapplicants, which can help you qualify for a larger loan amount but won’t help you meet the credit score minimum.

Cash advance apps

While technically not a personal loan, cash advance apps let you borrow small amounts of money – usually between $20 and $250 – to tide you over until your next payday. Some, like B9, let you access your entire paycheck, if eligible. When your paycheck clears, the app debits the advance amount from your account.

Instead of checking your credit, these apps connect with your bank account and determine your eligibility based on your earning and spending history. This means that you need to receive regular income via a direct deposit to qualify. Sometimes it can take a few months for you to qualify for the maximum advance available.

Cash advance apps never charge interest or fees for the advance, but you may need to become a member, which may cost between $1 and $9 per month. Some have the option to leave a tip, though they legally cannot require you to do so. Many also charge a fee for same-day funding, which usually ranges from around $1 to $5.

Credit card cash advances

Most credit cards allow you to withdraw cash from an ATM. If you already have a credit card, using a cash advance may be the most convenient way to cover short-term expenses, but it can cost as much as a payday loan, depending on how much you withdraw.

Most cash advances attract a flat fee of $5 to $10 per advance, or 3% to 5% of the amount borrowed. On top of this, you’ll pay interest — often at a higher rate than you pay for regular credit card transactions. This makes them an expensive choice, especially if you can’t pay the advance off before you’re charged interest on the balance owed.

Payday alternative loans

Payday alternative loans (PALs) are inexpensive short-term loans available through federal credit unions. They are designed to be an alternative to high-cost payday loans and are regulated by the National Credit Union Administration (NCUA). There are two types of PALs.

• PAL I loan amounts range between $200 to $1,000, with APRs capped at 28% and terms of 1 to 6 months.
• PAL II loans have no minimum loan amount and can run as high as $2,000, with APRs capped at 28% and terms of 1 to 12 months.

PAL I requires you to be a credit union member for one month to qualify. However, you can get a PAL II as soon as you join. The downside is that these aren’t available at many federal credit unions, so it may be difficult to either PAL in your area.

Installment loans

Installment loans are high-cost loans geared especially towards bad credit borrowers. Functionally, they work like personal loans, but they have lower loan amounts, ranging from $500 to $10,000, and rates that can reach 300% APR. You also typically only have 3 to 18 months to pay it off.

You can get installment loans at in-person retail centers or online. Most online installment loan providers don’t run a hard credit check, but you’ll likely need to show your pay stubs, bank statements or other proof of income.

But save installment loans for emergencies. Rates can reach 300% APR or more, and terms are short, usually 6 to 18 months. The high rates and short terms result in high monthly payments, which many people find difficult to sustain for the whole term. In some cases, the total cost may be higher than the expense of not borrowing.

Payday loans

Payday loans are a high-cost, advance on your next paycheck. Usually you can borrow between $50 to $500 with a fee of $10 to $15 per $100 borrowed. Fees and loan amounts vary by state — some states allow lenders to charge as much as $27 per $100 borrowed, while others have completely banned them, due to the high cost. Terms usually range from 7 to 30 days, depending on when your next paycheck is due.

A $10 fee might not seem that high, but 80% of payday loan borrowers need to renew the loan, according to the Consumer Financial Protection Bureau (CFPB). Each time you renew a loan, you have to pay an additional fee — often higher than the first finance charge.

Many borrowers stay in debt for at least 11 months, according to the CFPB, and some end up owing fees equivalent to ten times the amount they borrowed. Even in an emergency, the financial risk of taking out a payday loan may not be worth it.

Red flags to watch out for with installment and payday lenders

Some states require payday and installment lenders to meet strict standards, but some states have few consumer protections. Regardless of where you live, watch out for these red flags — they could be the sign of a payday loan scam.

• Poor rating with BBB. A poor BBB business rating rating or BBB alert indicates the business has a pattern of complaints and is not handling customer concerns in a timely or satisfactory manner – this is a red flag.
• No physical address. Legitimate payday lenders should provide physical address, phone support or live chat. If there’s just a contact form or an email address, try reaching out to see if you can get a response before you apply.
• Lack of transparency. Legit lenders of short-term, installment loans are legally required to disclose their fees and charges. These are typically found on their websites and store signs – and must be on your loan documents.
• Offers guaranteed approval. If you encounter a lender that claims to provide guaranteed short term loans, be wary. Legitimate lenders will ask about your monthly income and expenses when you apply.
• Requires money upfront. One of the biggest red flags to watch out for is if a lender requests money upfront – this is likely a scam. Any loan fees are paid out of your loan amount, and you don’t pay these upfront.
• Violates state regulations. Legit payday lenders can’t charge you more than the maximum limits set by the state. Check the regulations in your state to make sure your lender is above board.
• Add-on insurance. Some payday and installment lenders might encourage you to take out unnecessary insurance, such as a life insurance policy that names them as a beneficiary. This is a common tactic to make your loan more expensive while avoiding state APR regulations.

Watch out for tribal lenders

Tribal loans are payday or installment loans offered by members of an Indigenous nation. Because tribal communities are not subject to state or federal laws, US consumer protection laws don’t apply.

Because there are so few restrictions, tribal loans can be much more expensive than a US-based payday loan. It’s not always clear that a lender has a tribal affiliation either — some hide it in the fine print. But if you see a lender offering payday loans in a state where it’s illegal, chances are they’re a tribal lender.

Some US-based payday lenders have also attempted to claim tribal affiliation in order to get around payday regulations. Most famously, AMG Services offered payday loans with APRs as high as 1,000% to residents of states where payday loans are illegal, like New York. While AMG Services is not the norm for tribal lenders, it serves as a warning: You’ll have more protections if you borrow from a US-based payday lender.

Bad credit loan rates

The average rate for a bad credit loan is over 100% APR, according to a report from online loan marketplace LendingTree. People with credit scores between 560 and 579 received an average rate of around 117.42% APR in 2022. People with credit scores below 560 received an average interest rate of around 158.87% APR during that same year.

These numbers are high because they also include interest rates from payday and installment loan providers, in addition to personal loans. If you apply for a personal loan, you won’t pay more than 36% APR in most states. And if you improve your credit before you apply, you could qualify for a lower rate.

When to use bad credit financing

While it can be expensive to borrow money with bad credit, there are a few situations where it may make sense:

• For emergency expenses. Even with the best of planning, life happens. A bad credit loan can be a lifesaver in meeting unexpected expenses like car repairs or gas, and can help avoid the additional stress that not having the money could cause.
• To tie you over until payday. If you find yourself living paycheck to paycheck, cash apps are an interest-free way to borrow against your paycheck and avoid getting caught in a cycle of costly payday and installment loans.
• To build credit. Getting a bad credit loan and making regular on-time payments could help improve your credit as you build a payment history. However, this can backfire if you already have other debts — adding a new monthly bill can stretch your budget and increase your risk of default.

Other common uses like home improvements or debt consolidation are generally not beneficial when you have bad credit. Debt consolidation in particular, or using a personal loan to pay down high-interest debt, often isn’t worth it. Most lenders require a credit score of 670 or higher to qualify. And getting a rate low enough to help you save on interest may require an even higher credit score, close to 740.

Low-cost alternatives to bad credit financing

If you have bad credit, you might want to consider options besides personal loans, since many personal loan providers are off the table. These include:

• Debt payment strategies like the snowball method, which involves paying down small debts first, or avalanche method, which involves paying down accounts with high rates first, offer low-cost ways to get out of debt with bad credit.
• Debt relief includes a range of services for paying down debt, including credit counseling, debt settlement or even bankruptcy if there are no other options.
• Credit builder loans are a lower-cost option designed to help you build up and diversify your credit history. But you won’t be able to access the funds until you pay down the loan, and it could hurt your credit if you’re already struggling with debt.
• Lending circles are groups of people who pool money to loan out to others at low or no cost. Traditionally designed to help out with large expenses, like paying for a wedding, it may be a while before your turn comes around.
• Paycheck advances may be available through some employers as a company benefit, typically without a credit check and at the same cost for everyone. Ask your company’s accounting or HR department.
• Home equity loans and lines of credit (HELOCs) allow you to use your home as collateral for a loan, making it easier to qualify with poor credit.
• Credit cards can help you avoid interest if you pay off your balance each month — and some credit card companies accept poor credit.

There are also federal government debt relief programs for federal loans and mortgages that can help reduce your debts, including the Making Home Affordable program, federal student loan forgiveness and government grants.

How to improve your credit score

Got some time? Consider taking steps to improve your credit score before you apply to qualify for lower rates, higher amounts and an all-around better deal:

• Sign up for Experian Boost, a service that reports payments like utility bills, your cell phone bill and rent to credit agencies to increase your credit score.
• Check your credit report for mistakes that could be negatively affecting your credit, and contact the creditor if you see anything off.
• Stay on top of your bills and reach out to your creditors if you think you might be late on a payment. The most important factor in your credit score is your history of on-time repayments.
• Keep your credit cards open even after you pay off your credit card debt. The more access to unused credit you have, the lower your credit utilization ratio — which also plays into your credit score.
• Consider a credit-builder loan if your credit history is too thin. These can add a history of positive repayments to your credit report — often while helping you build an emergency fund.

Frequently asked questions

Where can I get a small personal loan for bad credit?

Small personal loans of $5,000 or less for those with bad credit are available from select online lenders, like OneMain Financial, Avant, Upgrade and Upstart. These lenders cap rates at 35.99% but charge origination fees on their loans. You can also get small personal loans for bad credit from installment lenders like OppLoans. OppLoans doesn’t run credit checks, but its APRs run higher than 35.99%.

What is the easiest loan to get with bad credit?

The easiest way to get a loan if you have bad credit is to apply with a bad credit personal loan or installment lender or a cash advance app provider. Installment lenders and cash advance apps don’t run credit checks — however, you will still need some form of income to be eligible.

What is the lowest credit score to get a personal loan?

While this varies by provider, you could potentially secure a personal loan with a credit score as low as 300. Upstart is one lender that offers loans to borrowers with scores of 300 and up, provided you meet its income and other requirements.