How to Get the Best Personal Loan Rates Despite Your Bad Credit

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.

personal loan rates
Logo

We’ve got your back! Student Loan Hero is a completely free website 100% focused on helping student loan borrowers get the answers they need. Read more

How do we make money? It’s actually pretty simple. If you choose to check out and become a customer of any of the loan providers featured on our site, we get compensated for sending you their way. This helps pay for our amazing staff of writers (many of which are paying back student loans of their own!).

Bottom line: We’re here for you. So please learn all you can, email us with any questions, and feel free to visit or not visit any of the loan providers on our site. Read less

Roughly 1 in 5 Americans has a credit score below 600, according to data from the credit bureau Experian.

If you’re one of them, you might be wondering, “How can I borrow money with bad credit?” After all, having bad credit doesn’t stop you from needing a loan if your income and savings fall short.

The good news is you can qualify for reasonable personal loan rates with bad credit. Here are three effective strategies for finding the best personal loans rates despite your not-so-stellar credit.

1. Learn how to spot predatory lenders

Payday loan and auto title loan companies target people with bad credit with their easy short-term loans. They market them as bad-credit loans with guaranteed approval, and you typically can get the cash within minutes and go on your way.

But their APRs are astronomical, and you usually have less than a month to repay the debt.

As a result, payday and auto title loans can throw you into a vicious cycle of debt that can be difficult to escape, especially if you’re living paycheck to paycheck.

To avoid such predatory loans, here are some signs to watch out for.

Guaranteed approval

If a lender is willing to lend to anyone regardless of their credit situation, it’s taking on a big risk.

To compensate, the lender often will charge exorbitant interest rates and fees, regardless of whether you’d qualify for better terms.

Quick cash

Most reputable lenders take at least a day to disburse loan funds to you. If a lender promises that you can walk out of the branch with cash in hand, you could pay dearly for the convenience.

In other words, if it sounds too good to be true, it probably is.

Ultra-short repayment periods

Most legitimate lenders give you at least 12 months to repay your personal loan. Predatory lenders, on the other hand, tend to define repayment terms in days and weeks.

And if you can’t manage to pay off the loan in time, you might have to take out another loan, throwing you into a vicious cycle of debt.

2. Look at alternative lenders for great personal loan rates

Even if you know how to spot predatory loans, it can be hard to find personal loans with decent interest rates.

Knowing where to go right away can save you time and money. Here are a few options to consider.

Your local credit union

Not all credit unions offer personal loans to people with bad credit. But the personal loan rates of those that do are relatively affordable.

That’s because the National Credit Union Administration caps interest rates for most loans at 18 percent. The credit union can, however, tack fees onto the loan that could raise the APR. But if it’s a short-term payday alternative loan, the maximum APR you can expect is 28.00%.

Online lenders

Traditional banks don’t offer many options for people with bad credit. But some online lenders offer reasonable personal loan rates. Here are a few options as of January 2018:

Lender Interest Rates Minimum Credit Score
OneMain Financial 17.59% to 35.99%  None
Avant 9.95% to 35.99% 580
LendingClub 5.99% to 35.89% APR 600

Be sure to shop around so you know you’re choosing from the best personal loan rates.

And read bad-credit loans reviews for these lenders to make sure other customers have had good experiences. It could be worth paying slightly higher personal loan rates to avoid a terrible experience.

Consider the monthly payments attached to any bad-credit loan offers to make sure they fit into your budget too. During the process of comparing personal loan companies, calculate how much you’d owe each month to determine if you can manage it.

3. Ask someone to cosign the loan

If your credit is bad enough, you might not qualify for a personal loan on your own.

But if a family member or trusted friend is willing to apply for the loan with you as a cosigner, it could improve your chances of getting approved  and with better personal loan rates.

It’s important, however, to understand what this means for your cosigner. For starters, they would be equally responsible for making payments on the loan. So, if you default, the lender could go after them.

Also, the loan will show up on your cosigner’s credit report, which could affect their credit for better or worse.

As a result, asking someone to cosign a loan is asking them to trust you implicitly. If you breach that trust by defaulting or falling behind on payments, it could destroy your relationship.

So, make sure you both know what you’re getting yourselves into.

Build your credit for better personal loan rates in the future

The best way to qualify for great personal loan rates is to establish an excellent credit history. This can take time. But fortunately, your personal loan can help you do it.

Your payment history is the most important factor in your credit score, so making on-time payments each month can make a big difference over time. Avoid missing payments by setting up automatic payments from your bank account.

You also can improve your credit by checking your credit reports and pinpointing your weak spots. You can get a free copy of each report once a year through AnnualCreditReport.com.

As you tackle the negative items on your report, you’ll see your score improve over time, making it easier to qualify for inexpensive personal loan rates in the future.

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.

SoFi Disclosures

  1. Personal LoansFixed rates from 6.58% APR to 14.87% APR (with AutoPay). Variable rates from 6.275% APR to 12.575% APR (with AutoPay). SoFi rate ranges are current as of July 16, 2018 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. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 6.275% APR assumes current 1-month LIBOR rate of 2.10% plus 4.175% 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.
  2. 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 Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

2 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  • Personal Loan Rate DisclosureFixed interest rates from 6.49% – 19.49% (6.49% – 19.49% APR) based on applicable terms. Lowest rates range from 5.99%-18.99% (5.99%-18.99% APR), 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.
  1. 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 us 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, our 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.
  2. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan 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. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.

* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

  • Personal Loan Rate DisclosureFixed interest rates from 6.49% – 19.49% (6.49% – 19.49% APR) based on applicable terms. Lowest rates range from 5.99%-18.99% (5.99%-18.99% APR), 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.
  1. 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 us 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, our 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.
  2. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan 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. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.
7.73% – 29.99%$1,000 - $50,000
Check rate nowon SLH's secure site
6.28% – 14.87%1$5,000 - $100,000
Check rate nowon SLH's secure site
6.87% – 35.97%*$1,000 - $50,000Visit Upgrade
8.00% – 25.00%$5,000 - $35,000
Check rate nowon SLH's secure site
4.99% – 29.99%$10,000 - $35,000Visit FreedomPlus
5.99% – 18.99%2$5,000 - $50,000Visit Citizens
15.49% – 34.49%$2,000 - $25,000Visit LendingPoint
5.99% – 35.89%$1,000 - $40,000Visit LendingClub
5.49% – 18.24%$5,000 - $75,000Visit Earnest
9.95% – 35.99%$2,000 - $35,000Visit Avant
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.