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|
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 up to 4.75% of loan balance 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.
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!
|Lender||APR Range||Loan Amount|
|1 Includes AutoPay discount. Important Disclosures for SoFi.
2 Includes AutoPay discount. Important Disclosures for Payoff.
3 Important Disclosures for FreedomPlus.
4 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
5 Important Disclosures for LendingPoint.
6 Important Disclosures for LendingClub.
All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.16% to 35.89%. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at time of application. The origination fee ranges from 1% to 6% and the average origination fee is 5.49% as of Q1 2017. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer.
7 Important Disclosures for Earnest.
8 Important Disclosures for Avant.
* The actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. Funds are generally deposited via ACH for delivery next business day if approved by 4:30pm CT Monday-Friday. Avant branded credit products are issued by WebBank, member FDIC.
** Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33
* Important Disclosures for Upgrade Bank.
Upgrade Bank Disclosures
** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.
|7.73% – 29.99%||$1,000 - $50,000||Visit Upstart|
|6.26% – 14.87%1||$5,000 - $100,000||Visit SoFi|
|6.99% – 35.97%*||$1,000 - $50,000||Visit Upgrade|
|8.00% – 25.00%2||$5,000 - $35,000||Visit Payoff|
|4.99% – 29.99%3||$10,000 - $35,000||Visit FreedomPlus|
|5.99% – 18.99%4||$5,000 - $50,000||Visit Citizens|
|15.49% – 34.49%5||$2,000 - $25,000||Visit LendingPoint|
|6.16% – 35.89%6||$1,000 - $40,000||Visit LendingClub|
|6.99% – 18.24%7||$5,000 - $75,000||Visit Earnest|
|9.95% – 35.99%8||$2,000 - $35,000||Visit Avant|