3 Best Installment Loans for People With Poor Credit

installment loans for people with poor credit

If your credit is in a bad place, you’re not alone. Roughly 43 percent of millennials have a credit score between 500 and 600, according to a 2016 study by TransUnion.

If you need some cash, though, finding installment loans for people with poor credit isn’t easy.

It might feel like payday loans are the only option. Fortunately, that’s not the case. There are direct lenders for bad credit that offer loans at significantly lower rates.

Here are three of the top lenders out there today as well as the features and fees they offer as of September 2017.

At a glance: 3 best installment loans for people with poor credit

Lender Minimum Credit Score Pro Con
Avant 580 You can see offers before applying Doesn’t offer secured loans
OneMain Financial None Offers secured and unsecured loans Terms are vague
Your local credit union Might vary Payday alternative loans cap the APR at 28.00% You must be an eligible member of the credit union

Avant

Although many lenders offer more than one type of loan, Avant specializes in unsecured personal loans. The online lender requires a minimum credit score of 580 and offers interest rates between 9.95% and 35.99%.

Even if you qualify for Avant’s highest APR, you’ll get a much better deal than you would with a payday loan, which can charge an APR of 400.00% or higher, according to the Consumer Federation of America.

The biggest drawback to Avant is the fact that it doesn’t offer secured loans, which require collateral such as a car, a motorcycle, or home equity. With a secured loan, you sometimes can qualify with a lower credit score because the lender can mitigate risk with your collateral.

You can, however, get a preliminary offer from Avant with a soft credit check, so you don’t have to officially apply to see what the lender will offer.

Avant is transparent about its loan terms and fees. Here are some you should know:

  • You can borrow between $2,000 and $35,000.
  • Repayment periods range from 24 to 60 months.
  • There is an administrative fee 4.75% of the amount of the loan.
  • The bank charges a $25 fee for late payments, but you can get a refund if you follow up your late payment with three consecutive on-time payments.
  • There’s a $15 dishonored payment fee if a payment is returned.
  • There’s no prepayment penalty fee.

OneMain Financial

If your credit score doesn’t meet Avant’s standards, OneMain Financial is a decent choice. The lender has no minimum credit score requirement. OneMain offers both secured and unsecured personal loans, giving you more options if you don’t qualify for an unsecured loan.

There’s one big problem with OneMain Financial, though: It isn’t forthcoming about its loan terms. For instance, you can’t find interest rate or fee information on its website. And when I called to verify information I found in other reviews, the answers were noncommittal.

Also, OneMain doesn’t offer pre-qualification with a soft credit check. Instead, you have to apply with a hard credit check to get an offer and see your terms.

Here’s what we do know:

  • You can borrow between $1,500 and $25,000 unless you live in California or Georgia. California’s minimum loan amount is $3,000, and Georgia’s minimum loan amount is $1,500 for current customers and $3,100 for others.
  • Repayment terms range from 12 to 60 months.
  • There’s no prepayment penalty fee, but you’ll pay an origination fee, which depends on the state in which you reside.

Your local credit union

If you’re a member of your local credit union, it might be your best chance to get great terms on an unsecured installment loan.

Some credit unions offer what they call payday alternative loans (PALs) for short-term cash needs. The best thing about them is the fact that the National Credit Union Administration requires that credit unions charge no more than 28.00% APR on PALs.

The main drawback is that you’re required to be a member of a participating credit union for at least one month before you can apply. So, if you need cash now, you’ll have to choose Avant or OneMain.

Another fact to keep in mind is that not all credit unions offer PALs. So, before you join one, double-check with a loan officer.

Here are other terms you can expect with a PAL:

  • You can borrow between $200 and $1,000.
  • Repayment terms range from one to six months.
  • There’s a maximum application fee of $20.
  • Other terms and fees might differ by credit union.

Which lender should you choose?

Although there aren’t many choices when it comes to installment loans for people with poor credit, it’s important that you choose wisely.

If you’re a member of a credit union, a PAL might be your best option unless you need more than $1,000 or a repayment term longer than six months.

If you do need more cash or a longer repayment term, consider Avant first. Its transparency and pre-qualification process make it clear what you’re getting.

But if you don’t meet Avant’s credit standards, OneMain Financial can save you money over a payday loan despite its transparency issues.

Regardless of which lender you choose, use your new loan as an opportunity to start rebuilding your credit. With on-time payments and responsible use of your other forms of credit, you eventually can qualify for loans with better rates and features.

Interested in a personal loan?

Here are the top personal loan lenders of 2018!
LenderRates (APR)Loan Amount 
1 Includes AutoPay discount. Important Disclosures for SoFi.

2 Important Disclosures for Citizens Bank.

SoFi Disclosures

  1. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Finance Lender Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)
  2. Personal Loans: Fixed rates from 5.49% APR to 14.24% APR (with AutoPay). Variable rates from 5.29% APR to 11.44% APR (with AutoPay). SoFi rate ranges are current as of December 1, 2017 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 5.29% APR assumes current 1-month LIBOR rate of 1.34% plus 4.20% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

Citizens Bank Disclosures

  1. Personal Loan Rate Disclosure: Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of August 1, 2017, the one-month LIBOR rate is 1.23%. Variable interest rates range from 6.02% – 15.97% (6.02% – 15.97% APR) and will fluctuate over the term of your loan with changes in the LIBOR rate, and will vary based on applicable terms and presence of a co-applicant. Fixed interest rates range from 5.99% – 16.24% (5.99% – 16.24% APR) based on applicable terms and presence of a co-applicant. Lowest rates shown are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with Citizens Bank at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, Citizens Bank checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  3. Automatic Payment Benefit: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
7.39% - 29.99%$1,000 - $50,000Visit Upstart
5.29% - 14.24%1$5,000 - $100,000Visit SoFi
8.00% - 25.00%$5,000 - $35,000Visit Payoff
5.99% - 16.24%2$5,000 - $50,000Visit Citizens
5.99% - 35.89%$1,000 - $40,000Visit LendingClub
5.25% - 14.24%$2,000 - $50,000Visit Earnest
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