Some people might have a not-so-good credit score, making it harder for them to get loans from usual banks. A 2019 study said that nearly 35% of Americans have credit scores below 670.
Thankfully, there are special lenders for those with lower credit scores. These can be found online or in person. It’s key to understand the difference between personal loans and payday loans for those with bad credit.
People with not-so-good credit scores sometimes need extra money. Bad credit loans help them during tough times like when their car breaks down, a home appliance stops working, or they have school fees to pay.
There can be sudden medical bills too. Even with insurance, sometimes there’s still a big part of the bill they need to pay themselves. That’s when some might use bad credit loans or borrow money from online lenders.
Also, urgent house problems, like a roof that leaks or broken pipes, need fixing fast. Bad credit loans can help people handle these issues even if they don’t have the best credit.
| Type of Loan | Interest Rate Range | Collateral Required | Loan Amounts | Repayment Period | Suitable For |
|---|---|---|---|---|---|
| Loans with a Co-Signer | Varies | No | Varies | Varies | Borrowers with a creditworthy co-signer |
| Joint Loans | Varies | No | Varies | Varies | Borrowers with a creditworthy co-borrower |
| Unsecured Loans for Poor Credit | Higher | No | Varies | Varies | Borrowers without collateral |
| Peer-to-Peer Loans | Lower | No | Varies | Varies | Applicants seeking lower interest rates |
| Payday Alternative Loans (PALs) | ≤ 28% | No | $200 - $1,000 | 1 - 6 months | Borrowers seeking lower-cost payday loan alternatives |
| Title Loans for Bad Credit | High | Yes (vehicle) | 25% – 50% of vehicle value | Varies | Applicants with a vehicle |
| Invoice Financing | Varies | Yes (unpaid invoices) | Based on invoice value | Short-term | Business owners with unpaid invoices |
| Equipment Financing | Varies | Yes (equipment) | Based on equipment value | Varies | Business owners needing equipment |
| Purchase Order Financing | Varies | No | Based on purchase order value | Short-term | Businesses needing capital for purchase orders |
| Hard Money Loans | High | Yes (real estate) | Varies | Short-term | Real estate investors, startups |
| Online Line of Credit | Higher | No | Varies | Flexible | Borrowers needing on-demand cash access |
| Short-Term Bad Credit Loans | High | No | Varies | Up to 1 year | Borrowers needing quick financing |
| Low Credit Payday Loans | Very High (around 400% APR) | No | ~ $500 | Short-term (2-4 weeks) | Borrowers needing quick cash with poor credit |
| Merchant Cash Advance (MCA) | High | No | Varies | Flexible (based on sales) | Businesses with strong credit/debit card sales |
If you have bad credit and are worried about taking out a bad credit loan, there are many alternatives available.
If you do have any savings available, using them may be a more sensible option than taking out a high-interest loan. Although your savings may be gaining interest, this is likely to be less than you would pay on a loan. Therefore, this is likely to be a cheaper option and save you money in the long run.
Opting to borrow from friends or family will mean that you avoid the expensive interest charges associated with taking out a bad credit loan. Also it will not impact your credit score. If you do choose to borrow money, make sure that all parties are clear on the repayment, namely how much you will be borrowing and when you will be paying it back.
If you need short-term funds, it may be possible to ask your boss to advance your wages. Many companies are able to do this and it would mean that you would not have to take out a high-interest loan. There is no need to make a repayment on these advances as it is money that you have already earned and comes directly out of your wages.
Using a relative or friend with good credit to act as a guarantor on your loan will mean you are more likely to be approved. If you default the loan repayment, it will mean that the guarantor has to pay so it is worth understanding the risks before entering into this type of agreement.
Credit unions provide loans and funding for those who need financial assistance. You will need to be a member of the union but the membership fee tends to be small. Unlike banks, credit unions often offer personalized services and can provide more options for those with a poor credit history.
Nonprofit credit counseling organizations provide programs to assist people in handling their debts and enhancing their credit ratings. These programs involve collaborating with a credit expert to establish a budget and payment strategy, and discussing with lenders to lower interest rates or forgive charges.
A bad credit loan enables those with a poor or very bad credit score to borrow money. These loans will usually have higher interest rates than other loans to reduce the risk of borrowers not making repayments.
Typically, your credit score determines whether or not you can receive a loan, with bad credit making you less likely to qualify successfully; however, there are a growing number of lenders willing to provide loans for those with a bad credit history.
If you have a poor or less-than-perfect credit score, it does not mean that you are ineligible to apply for a loan, even if you have been declined in the past or have defaulted on prior loans. However, you may be subject to different loan terms or interest rates. You may also be required to secure the loan using collateral, for example, having to take out a title loan or car loan.
These loans are like regular loans, but they have higher costs because they’re riskier for the people giving the money. If someone has a low credit score, they can ask for these loans and use them to pay for emergencies or put all their debts together.
The cost of a bad credit loan will depend on the lender and your financial profile. Typically, bad credit loans come with high APR, with the average title loan or payday loan product charging an interest rate of between 300-600% APR.
The APR calculates interest as an annual rate, as if the product were to last for the entire year. However, these loan products tend only to be short-term, lasting just a few weeks or months.
If your credit report shows defaulted payments, heavy debt or negative repayment histories, this demonstrates risky borrowing behavior and could mean that you have a very bad credit score; however, credit scores are based on a combination of factors.
Information from credit reference bureaus like Equifax, Experian, and Transunion can help you if you think you have a bad credit score. This is a paid service but you can request a free trial which will tell you your credit score.
Different places like banks, websites, and other places give out these loans. Some places are really good at giving loans to people with low credit. If someone needs a loan and they have bad credit, they can find one online or in stores in their neighborhood.
Interest rates for these loans are usually higher than regular loans because they’re riskier for the people giving the money. Online, the rates can be different based on who’s lending the money, how much is borrowed, how long you have to pay it back, and the borrower’s credit score. Loans that have something valuable as a backup, like a car, might have lower rates, but they’re riskier for the person borrowing the money.
You must meet the following requirements to get a bad credit loan:
Yes – you can get instant approval for a bad credit loan and you can use them on emergencies. We know that unexpected expenses will happen – whether you need money to fix your car, a loan to pay for hospital bills, or to help you pay off your bills – then we can help. If you need $500, $750 or even $2,000 we can get you an emergency loan to help you through to the next payday.
As humans, we will always try to save money if needed in an emergency, but sometimes those unexpected bills throw you off and mean you need extra money. It’s called an emergency because it is exactly that, unexpected! If you knew it was coming it wouldn’t be an emergency. Let Capital Bean get you the money you need to get you back on your feet.
Even if you have bad credit we can match you with lenders that can help. We will match you with someone who works with all types of credit and even considers very bad credit applications. When it is an emergency loan we know that you’ll need speedy cash and that is why our application only takes 5 minutes. And you can sometimes get the money in your bank account the very next day.
Yes – you can still get a loan even if you have a very bad credit score. At Capital Bean we work with specialist lenders that consider all credit scores. These lenders can help you take out a loan of up to $5,000 even if you have a bad credit score, taking into account other factors such as employment status, income, living status and the purpose of your loan.
Bad credit loan companies are used to working with struggling financial profiles so tend to be more lenient about the requirements. Regardless of whether you have had missed payments in the past, if your current situation is stable (for example you have a steady income and commit to repaying your loan), they are likely to consider your application.
For online loans with low credit, there might be some extra costs like fees for starting the loan, fees if you pay early or late, and other charges. It’s really important to know about all these costs before saying yes to a loan, especially if you have bad credit.
If you pay late, there might be a fee. This fee can change based on your loan, who’s giving you the money, and your past with money. Different loans and lenders have different fees, so it’s good to know what they are.
There are a few options available for borrowers with bad credit including:
It is possible to get a quick loan and it depends on a number of factors. Many bad credit loan companies can offer same-day loans and a 100% online application. This means that often, in just 24 hours, you can apply, be approved and receive funds.
Usually, smaller amounts are faster to be funded and can be done in as little as 1 hour, depending on the company. Often larger amounts such as $1,000 or $2,000 will need longer to process as the lender may need to check that your income information is correct before approving funds.
If your bad credit loan is a secured loan, the lender will need to check the details of your collateral which may delay the process by a day or two.
It is possible to get a quick loan and it depends on a number of factors. Many bad credit loan companies can offer same-day loans and a 100% online application. This means that often, in just 24 hours, you can apply, be approved and receive funds.
Usually, smaller amounts are faster to be funded and can be done in as little as 1 hour, depending on the company. Often larger amounts such as $1,000 or $2,000 will need longer to process as the lender may need to check that your income information is correct before approving funds.
If your bad credit loan is a secured loan, the lender will need to check the details of your collateral which may delay the process by a day or two.
How you pay back the loan depends on the rules of the loan and who gave it to you. Some loans need you to pay the same amount every month, while others let you pay when you can. It’s important to know how you have to pay it back and make sure it fits with your money situation.
At Capital Bean, you can borrow to be repaid over a maximum period of 5 years. Some of our shortest loans are repaid in 2 weeks depending on the amount.
Yes – in most US states bad credit loans are legal. Some states, however, have laws against payday loans or strict regulations in place. Check out our state pages for more advice and information specific to your location. Make sure you are aware of payday laws and acts where you live before applying.
If you pay a bad credit loan on time, it might help make your credit score better in the long run. But, before getting the loan, make sure you can afford it and that it won’t hurt your budget.
Other choices do exist. You can borrow money from family or friends, use a credit card that needs something valuable as backup, combine your debts into one loan, get help from places that give advice on credit for free, or look into ways to put all your debts together or settle them.
A good Debt-To-Income (DTI) ratio for any loan is 35% or less. Lenders who work with people with bad credit might be more flexible about this ratio. It’s a smart idea to ask this question when you’re looking at lenders for your loan.
It’s important to only take a loan if you can repay it on time. After getting the loan, setting up automatic payments is a good idea. Also, always check your account to see how much you owe, the interest adding up, and any extra fees.
Use our 100% free online form to apply in less than 5 minutes.
You will receive an instant decision on screen from one of our lending partners who will offer the best rates.
You have already provided your bank account details so within 1 hour, the same day or the next business day you will get your funds.
Scams and untrustworthy lenders are some of the risks of taking out a loan with bad credit. These scams can be financially devastating and cause long-lasting damage to your credit. To protect yourself from falling victim to such scams, consider the following tips before filling out an application:
Using these tips, you can avoid loan tricks and keep your money safe.
Bad credit can happen for many reasons: having a lot of debt, opening too many accounts, not paying things on time, and other things. If you want better loan deals and lower interest rates, improving your credit is important. Here are some ideas to help raise your credit score and fix your credit history.
By doing these things and being smart with your money, you can make your bad credit better and be in a healthier money situation.
Remember, it’s essential to understand what you’re getting into before borrowing money.
You might not need a certain credit score for bad credit loans, but they often come with:
Paying these loans on time can help fix a bad credit score, but it can worsen if you don’t pay.
While bad credit loans can help in tough times, it’s essential to improve your credit for more excellent loan deals in the future. Look at all the choices, the loan rules, the interest rates, and any extra costs. You might see that another personal loan that lets you borrow more and costs less is better for you.
At Capital Bean we want to help you find the best money solutions, like the right loans for bad credit or other credit options. We know how important it is to check your current debts, interest rates, and other costs to see if an online loan or a loan for bad credit fits with your money situation.
You should be careful when thinking about a bad credit loan online. If you need expert help, we really suggest talking to financial experts or people who advise on credit. They can guide you about lenders, credit, and different loan types. If you’re struggling with missed payments, lots of credit card debts, or high costs, don’t worry. There’s always a way to a better money future. This might include loans for debt help, personal loans, or even personal credit advice – and we’re here to guide you to the best choice.
Capital Bean is a place you can trust for good money advice. We've helped many people with their money needs in the past. At Capital Bean, our main goal is to help you understand and grow your money. Whether you're curious about how to save, use credit cards, or get personal loans, we're here to guide you.
A Little About Capital Bean
Started in 2021, we've provided financial help to more than 275,000 people. If you're among the many Americans facing money challenges, Capital Bean's online loans might be the solution you need. Our online application is simple and hassle-free. No more standing in lines or dealing with tons of papers. Just apply from your home, and you could get the money on the same day* if everything goes right. Start with a trusted financial choice today.
Unexpected costs shouldn't mess up your budget. Try an online loan with Capital Bean today and see how we can help.
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* Not every loan application gets approved. The decision and loan conditions depend on your credit check and local laws. If you get approval before 10:30 a.m. CT from Monday to Friday, you'll usually get the funds that same day. If it's after this time, expect the funds the following business day. If we need more information to check your application, and it's approved afterward, the funds will be given the next business day after we complete the checks.
† Regarding the Military Lending Act (MLA): Capital Bean doesn't provide loans to those covered by the MLA since all loans we make or organize surpass the MLA's 36% MAPR cap. We check with a national consumer reporting agency to see if someone is covered by the MLA. We also pose the mentioned question to double-check and fully adhere to MLA guidelines.
According to the MLA, a "servicemember" usually refers to someone who is a regular or reserve member of the Army, Navy, Marine Corps, Air Force, or Coast Guard. They should be on active duty under an order that isn't just for a short span of less than 30 days. On the other hand, a "dependent" typically means a servicemember's spouse, a child below 18 years old, or any person who received over half of their financial support from the servicemember in the recent 180 days.
To see if you fall under the MLA, you can make a one-time request on the official MLA website.
Loan Disumbersement - If your application is approved before 10:30 a.m. CT from Monday to Friday, you'll usually receive your funds on that day. If it's approved after that time, expect your funds the following work day. If we need more time to double-check your application details and it's eventually approved, you'll receive your loan the business day after we finish the additional checks.
High-Cost Disclosure: Loans from Capital Bean come with a high APR, making them unsuitable for long-term financial plans. Most of the time, these loans also come with an origination fee that you won't get back if you decide to pay off the loan early. Ensure the loan you pick fits your financial needs and repayment capability. Think about the loan's amount, duration, and the charges involved. If you opt for a loan with high interest, you can lower the overall charges by paying more than just the minimum due. If you pay late, it will cost you more, and you might get a late fee. If you're facing credit issues, consider seeking advice on managing your credit. For useful tools and info on understanding finances, trends in credit scores, and financial terms, check the Resources section on our website at www.capitalbean.com
