There’s no doubt options for online loans for bad credit are somewhat limited ⏤ but you don’t have to rely on payday lenders when you have bad credit.
Several online lenders offer installment loans for bad credit. However, you have to expect online loans for bad credit will cost you a lot more in interest.
Best Online Loans For Bad Credit
All lenders on this list will perform a soft credit inquiry to determine eligibility so your credit score will not take a hit to find out if you’re qualified.
- Suggested minimum credit score is 560.
- Loan amounts range from $1,000 – $50,000.
- Repay monthly, over 3 to 5 years.
- APR range 11.69% to 35.99%.
- Loan origination fee of 5.25% to 9.99% of the loan amount which is deducted directly from your loan funds.
- Reports payments to all three major credit bureaus.
- No prepayment fee.
Upgrade offers personal loans are ideal for consolidating credit cards or managing debt consolidation. You can offset the origination fee with Upgrade’s deals and discounts — such as the autopay discount or opening a checking account with Upgrade.
- Minimum suggested credit score 580.
- APR range 8.49% to 35.99%.
- Loan amounts $1,000 to $50,000.
- Loan origination fee of 1.85% to 9.99%.
- Multiple rate discounts.
- Secured and joint loans.
- Repayment terms 3 to 5 years. 7 years on some larger loans.
OppLoans is a lending company that specializes in providing installment loans for bad credit. These loans are very expensive but typically cheaper than payday loans. Proceed with caution if you decide to accept a loan offer and keep in mind, you can pay this loan off early to save money on interest.
- No minimum suggested credit score.
- APR is 1609%.
- Loan amounts $500 to $4,000.
- Loan origination fee of 1.85% to 9.99%.
- Receive income through direct deposit.
- Repayment terms up to 18 months.
- OppLoans offers loans to all states except CO, CT, IL, IO, ME, MD, MA, NH, NJ, NY, PA, SD, VT and WV.
Upstart loans are primarily designed for people with little to no credit but they will consider people with bad credit because they rely on more than just your credit to make loan decisions. Approval is based on several factors including education and employment history.
- Minimum suggested credit score 300.
- APR range 7.80% to 35.99%.
- Loan amounts $1,000 to $50,000.
- No loan origination fee.
- Must have a regular source of income and a U.S. bank account.
- Repayment terms up to 5 years.
What are online installment loans with bad credit
An installment loan is a type of loan that provides borrowers with a fixed amount of money, which is paid back over a set period of time through a series of regular payments or installments.
The payments typically include both principal and interest, and are scheduled to occur at regular intervals, such as monthly or bi-weekly.
Installment loans can be secured or unsecured, depending on the lender and the borrower’s creditworthiness:
- Secured installment loans require collateral, such as a car or house, to be pledged as security against the loan.
- Unsecured installment loans, on the other hand, do not require collateral, but may have higher interest rates to compensate for the increased risk to the lender
What’s the difference in an installment loan vs. a payday loan
Installment loans are often used for major purchases or expenses that are too large to be covered by a single payment, and can provide borrowers with a predictable repayment schedule that makes it easier to budget and manage their finances.
The main difference between an installment loan and a payday loan is the way they are repaid.
Installment Loans:
- An installment loan is repaid over time, typically in equal payments or installments.
- Installment loans usually have longer repayment periods, ranging from a few months to several years, and often involve larger amounts of money.
- Installment loans are generally used for larger purchases or expenses, such as a car, home repairs, or medical bills.
Payday Loans:
- Payday loans are designed to be repaid in full on the borrower’s next payday and are usually a small-dollar amount, like $300.
- The repayment period for a payday loan is typically very short, often just a few weeks, and the loan is usually repaid in a single lump sum payment on the borrower’s next pay date, which includes both principal and interest.
- The interest rate and fees for payday loans tends to be much than installment loans.
- Borrowers with bad credit often qualify for payday loans because they have less stringent credit requirements than installment loans.
- Payday loans can also lead to a cycle of debt for borrowers who cannot afford to repay the loan in full on their next payday.
What’s considered a bad credit score?
Here is how FICO® breaks down credit scores:
- Bad credit: 579 and below
- Fair credit: 580-669
- Good credit: 670-739
- Very good credit: 740-799
- Exceptional credit: 800 and above
Facts to consider when getting online loans for bad credit
1. Online loans for bad credit are unsecured
With unsecured loans for bad credit you won’t be required to place an asset as collateral, so the lender can’t automatically take a piece of your property as payment if you default.
But unsecured loans for bad credit allow lenders to take other collection actions even if they can’t automatically take your house, car, or other assets.
These collection actions include reporting late payments to credit bureaus, hiring a collection agency, or filing a lawsuit against you. Be sure to make all payments on time, and if you run into any trouble making a payment, reach out to your lender immediately.
2. Online loans for bad credit will have fixed repayment periods
Unlike payday loans which are typically the only option for bad credit loans, you’ll have a set period of time to repay your online loan for bad credit. Loan periods are usually stated in months: 12, 24, 36, 48, and some times even 60 months.
However, keep in mind that while longer repayment periods will lower your monthly loan payment, you’ll end up paying more in interest than if you had a shorter repayment period. That’s because interest is added on per payment.
3. Common fees with online loans for bad credit
Most bad credit loans will charge late fees if your payments fall behind. Another fee to consider with online loans for bad credit is origination fees.
Origination fees can run from about 1 to 6 percent of the amount you’re borrowing and is usually taken from the loan proceeds when the loan is disbursed. Late payments have a huge negative impact on credit scores, so avoid at all costs.
People often experience an immediate boost in credit scores once bad credit loans are positively reported to the credit bureaus.
