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

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. 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 to help you understand what you are buying. Be sure to consult with 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.

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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?

LendingTree allows you to compare rates from multiple lenders by filling out one easy form. 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. 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 to help you understand what you are buying. Be sure to consult with 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.

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. 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 to help you understand what you are buying. Be sure to consult with 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.

RATES (APR)loan amount
5.99% – 20.01%1 $5,000 to $100,000
6.14% – 35.99% $1,000 to $50,000
6.98% – 35.89%* $1,000 to $50,000
99.00% – 199.00%2 $500 to $4,000
5.99% – 24.99%3 $5,000 to $35,000
5.99% – 29.99%4 $7,500 to $40,000
compare rates on Lendingtree now
NMLS #1136: Terms & Conditions Apply
1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Fixed rates from 5.99% APR to 20.01% APR (with AutoPay). Variable rates from 6.49% APR to 14.70% APR (with AutoPay). SoFi rate ranges are current as of November 15, 2019 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 6.49% APR assumes current 1-month LIBOR rate of 1.81% plus 4.93% 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. To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.
    See Consumer Licenses.
  3. Minimum Credit Score: Not all applicants who meet SoFi’s minimum credit score requirements are approved for a personal loan. In addition to meeting SoFi’s minimum eligibility criteria, applicants must also meet other credit and underwriting requirements to qualify.
  4. If you lose your job through no fault of your own, you may apply for Unemployment Protection. SoFi will suspend your monthly SoFi loan payments and provide job placement assistance during your forbearance period. Interest will continue to accrue and will be added to your principal balance at the end of each forbearance period, to the extent permitted by applicable law. Benefits are offered in three month increments, and capped at 12 months, in aggregate, over the life of the loan. To be eligible for this assistance you must provide proof that you have applied for and are eligible for unemployment compensation, and you must actively work with our Career Advisory Group to look for new employment. If the loan is co-signed the unemployment protection applies where both the borrower and cosigner lose their job and meet conditions.
  5. 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 Includes AutoPay discount. Important Disclosures for Opploans.

Opploans Disclosures

Direct Deposit required for payroll.

Opploans currently operates in these states: . *Approval may take longer if additional verification documents are requested. Not all loan requests are approved. Approval and loan terms vary based on credit determination and state law. Applications processed and approved before 7:30 p.m. ET Monday-Friday are typically funded the next business day.

  1. To qualify, a borrower must (i) be a U.S. citizen or permanent resident; (ii) reside in a state where OppLoans operates; (iii) have direct deposit; (iv) meet income requirements; (v) be 18 years of age (19 in Alabama); and, (vi) meet verification standards.
  2. NV Residents: The use of high-interest loans services should be used for short-term financial needs only and not as a long-term financial solution. Customers with credit difficulties should seek credit counseling before entering into any loan transaction.

  3. OppLoans performs no credit checks through the three major credit bureaus Experian, Equifax, or TransUnion. Applicants’ credit scores are provided by Clarity Services, Inc., a credit reporting agency.

  4. Based on customer service ratings on Google and Facebook. Testimonials reflect the individual’s opinion and may not be illustrative of all individual experiences with OppLoans. Check loan reviews.

  5.  

    Rates and terms vary by state.

3 Includes AutoPay discount. Important Disclosures for Payoff.

Payoff Disclosures

  1. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.
4 Important Disclosures for FreedomPlus.

FreedomPlus Disclosures

  1. All loans available through FreedomPlus.com are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. All loan and rate terms are subject to eligibility restrictions, application review, credit score, loan amount, loan term, lender approval, and credit usage and history. Eligibility for a loan is not guaranteed. Loans are not available to residents of all states – please call a FreedomPlus representative for further details. The following limitations, in addition to others, shall apply: FreedomPlus does not arrange loans in: (i) Arizona under $10,500; (ii) Massachusetts under $6,500, (iii) Ohio under $5,500, and (iv) Georgia under $3,500. Repayment periods range from 24 to 60 months. The range of APRs on loans made available through FreedomPlus is 5.99% to a maximum of 29.99%. APR. The APR calculation includes all applicable fees, including the loan origination fee. For Example, a four year $20,000 loan with an interest rate of 15.49% and corresponding APR of 18.34% would have an estimated monthly payment of $561.60 and a total cost payable of $7,948.13. To qualify for a 5.99% APR loan, a borrower will need excellent credit on a loan for an amount less than $12,000.00, and with a term equal to 24 months. Adding a co-borrower with sufficient income; using at least eighty-five percent (85%) of the loan proceeds to directly pay off qualifying existing debt; or showing proof of sufficient retirement savings, could help you also qualify for the lowest rate available.
* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

* Personal loans made through Upgrade feature APRs of 6.98%-35.89%. All personal loans have a 1.5% to 6% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by WebBank, Member FDIC.

** 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.

Published in Credit & Debt, Loans

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