Best Personal Loans for Bad Credit

You have options when it comes to qualifying for a personal loan with bad credit

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Struggling with bad credit can be one of the most stressful experiences in the world. If a financial emergency strikes or you want to consolidate your debt, you might believe it's impossible to qualify for a personal loan without turning to predatory payday lenders. In most circumstances, that's not true.

Personal loan options can be more limited when your credit isn't in good shape, but that doesn’t mean you have no options. There are lenders who may be willing to offer you a personal loan even if you have a poor credit rating.

Best Bad Credit Loans–November 2020

Lender Best For APR Range Minimum Loan Amount Maximum Loan Amount Terms Recommended Credit Score
Avant Best Online Loan 9.95%–35.99% $2,000 $35,000 24–60 months 600+
First Tech Federal Credit Union Best Maximum Loan Amount 7.7%–18% $500 $50,000 24–84 months 600+
Navy Federal Credit Union Best For Small Loans and Veterans 7.49%–18.00% $250 $50,000 6–60 months 580+
LendingPoint Best Post-Bankruptcy Personal Loan 9.99%–35.99% $2,000 $25,000 24–48 months 585+
OneMain Financial Best In-Person Loan Experience 18%–35.99% $1,500 $20,000 24–60 months 580+
PenFed Credit Union Best Credit Union 6.49%–17.99% $500 $20,000 6–60 months 580+
Rocket Loans Best for Fast Funding 7.161%–29.99% $2,000 $45,000 36–60 months 580+
LendingClub Best Peer-to-Peer Lending 10.68%–35.89% $1,000 $40,000 36–60 months 580+
Upgrade Best With a Co-signer 7.99%–35.97% with autopay $1,000 $35,000 36–60 months 580+
Local credit unions Best Payday Alternative Loan up to 28%   up to $1,000 1–12 months  
Loan amounts, APR, and repayment period may vary by loan purpose or type.

Avant: Best Online Loan

Avant

Avant offers the best overall personal loan to borrowers with credit challenges. If you qualify for funding, you could receive up to $35,000. Interest rates start as low as 9.95%. Although Avant charges an administrative fee, the maximum amount it charges (4.75%) is lower than what you may see from other comparable lenders.

Pros
  • Lower starting interest rate among subprime lenders, but you might pay more if your credit score is on the low end of Avant’s approval range

  • No prepayment penalty for paying off your loan early

  • Soft credit inquiry performed when you check your loan options online

Cons
  • Higher interest rates compared to the rate you might receive elsewhere with better credit

  • Low maximum loan amount of $35,000—higher loan amounts available with other lenders

  • An administrative fee up to 4.75% may be taken directly out of your initial loan amount

Other important information:

  • Minimum/maximum amount you can borrow: $2,000 to $35,000
  • APR range: 9.95%–35.99%
  • Fees: Avant may charge an administrative fee up to 4.75% that comes directly out of your loan. The lender charges late fees and dishonored payment fees as well.
  • Recommended minimum credit score: 600
  • Other qualification requirements: Besides checking your credit score, Avant will review your income to see if you qualify for a loan and how much you can borrow.
  • Repayment terms: 24 to 60 months
  • Time to receive funds: Loan funds may be deposited in your account as soon as the next business day.

Read the full review: Avant Personal Loans

First Tech Federal Credit Union: Best Maximum Loan Amount

First Tech Federal Credit Union

Founded in 1952, First Tech Federal Credit Union is geared towards major technology-geared companies (though anyone can join the Financial Fitness Association for $8).

Interest rates start as low as 7.70% and they offer personal loans up to $50,000.

Pros
  • Higher maximum loan amount compared with other lenders in this category

  • Longer loan terms than other personal loan companies

  • No prepayment penalties if you decide to pay off your loan early

Cons
  • A co-borrower may be needed to qualify for a lower interest rate

  • No soft credit inquiry to check your loan offer and estimated interest rate online

  • Access for members only thought qualifying as a member can be done through the Financial Fitness Association

Other important information:

  • Minimum/maximum amount you can borrow: $500 to $50,000
  • APR range: 7.70% - 18%
  • Fees: None
  • Recommended minimum credit score: Reported to be 600, but not stated on website
  • Other qualification requirements: You should be at least the age of majority in your state, a U.S. citizen or living in the U.S. with a valid visa, have a valid email address and have a verifiable bank account.
  • Repayment terms: Choose between 24 and 84 months (two or seven years).
  • Time to receive funds: As soon as the same business day.

Read the full review: First Tech Federal Credit Union Personal Loans

Navy Federal Credit Union: Best For Small Loans and Veterans

Navy Federal

This credit union offers some of the best rates for those with less than stellar credit and one of the only financial institutions that offer such a low loan amount — starting at $250. Terms start at 6 months and you can secure a co-signer to help you qualify for a better rate. 

To be eligible for membership, you need to have ties to the Department of Defense, the armed forces, or the National Guard. Otherwise, you’ll need to be a veteran or have an immediate family member who has a Navy Federal membership. 

Pros
  • Joint applications available: members can apply with a co-borrower to secure a more competitive interest rate

  • Low minimum loan amount: At $250, this amount is the lowest among the lenders on our list

  • Short loan terms available: Repayment terms start at just 6 months


Cons
  • Credit union membership required

  • No soft credit inquiry: There is no prequalifying option, meaning members have to submit a full application

  • Higher APR for certain terms: Borrowers with terms of 36 months or more will receive a higher rate, starting at 14.79%

Other important information:

  • Minimum/maximum amount you can borrow: $250 to $50,000
  • APR range: 7.49% - 18%
  • Fees: None
  • Recommended minimum credit score: 580
  • Other qualification requirements: Need to be an existing Navy Federal member
  • Repayment terms: Choose between 6 and 60 months 
  • Time to receive funds: As soon as the same business day

LendingPoint: Best Post-Bankruptcy Personal Loan

LendingPoint Logo

Qualifying for a personal loan can be especially tricky if you’ve filed bankruptcy in the past. But if your bankruptcy has been discharged for at least 12 months, LendingPoint might be willing to work with you.

LendingPoint offers loans to borrowers in 49 states and Washington, DC with credit scores as low at 585. Qualified applicants can borrow up to $25,000 and interest rates start at 9.99% up to 35.99%. 

Pros
  • Lower credit scores accepted if you satisfy other qualification criteria

  • Past bankruptcy isn’t necessarily a deal killer as long as it was discharged at least 12 months ago

  • No prepayment penalty applies if you want to pay off your loan early

Cons
  • Lower maximum loan amount compared with other lenders

  • Origination fees can be as high as 6%, depending on the state where you live

  • Higher interest rates compared to the APR you might be offered elsewhere with better credit

Other important information:

  • Minimum/maximum amount you can borrow: $2,000 to $25,000
  • APR range: 9.99%–35.99%
  • Fees: LendingPoint charges origination fees as high as 6%.
  • Recommended minimum credit score: 585
  • Other qualification requirements: You should be 18 years or older, provide a state or federal ID and Social Security number, and have a bank account in your name. You also need a minimum annual income of $20,000.
  • Repayment terms: 24 to 48 months
  • Time to receive funds: Once you're approved, you can receive funds as soon as the next business day.
  • Restrictions: If you live in the state of West Virginia you cannot receive a loan through LendingPoint. 

Read the full review: LendingPoint Personal Loans

OneMain Financial: Best In-Person Loan Experience

OneMain logo

If you prefer to do business with a lender face-to-face, OneMain Financial may be a good fit. The lender has almost 1,600 branches in 44 states where it offers unsecured personal loans to borrowers with less-than-perfect credit. Interest rates start at 18% and qualified applicants may be able to borrow up to $20,000.

Pros
  • Numerous branches available for borrowers who prefer to meet or pick up funds in person

  • No prepayment penalty if you opt to pay off your loan early

  • Soft credit pull used to check for prequalified offers

Cons
  • High starting interest rate compared with some other subprime lenders

  • Maximum loan amount of $20,000 is low compared with other personal loan providers

  • Origination fees and late fees may be charged on top of interest costs

Other important information:

  • Minimum/maximum amount you can borrow: $1,500 to $20,000
  • APR range: 18%–35.99%
  • Fees: Origination fees can be a flat fee from $25 to $400 or 1% to 10% of your loan amount, depending upon your state of residence. Late fees also vary by state and can be as high as $30 per late payment or 15% of the size of your monthly payment.
  • Recommended minimum credit score: 580
  • Other qualification requirements: OneMain Financial will consider the following when you apply for a loan: your credit history, income, debts, and any collateral you wish to provide.  
  • Repayment terms: The term length maybe 24, 36, 48, or 60 months.
  • Time to receive funds: You could receive your funds the same day you’re approved if you opt to pick them up in person. Direct deposit may take one to two business days.
  • Restrictions: If you’re pre-qualified for a personal loan with OneMain Financial, you’ll need to visit a branch and meet with a loan specialist in-person to complete the application process.

Read the full review: OneMain Financial Personal Loans

PenFed Credit Union: Best Credit Union

PenFed Credit Union

Technically a credit union, anyone can join if they joinNational Military Family Organization or the Voices for America's Troops for $17 each. In addition to a myriad of banking products and services, PenFed Credit Union also offers personal loans for members who have a minimum credit score of 580. Plus, rates are competitive, starting at 6.49%.

Pros
  • Low minimum loan amounts available starting at $500

  • No prepayment penalty if you opt to pay off your loan early

  • Co-borrower may help you qualify for a more competitive rate

Cons
  • Maximum loan amount of $20,000 is low compared with other personal loan providers

  • Membership required in order to receive a personal loan

  • Hard credit pull required since there is no prequalification option

Other important information:

  • Minimum/maximum amount you can borrow: $500 to $20,000
  • APR range: 6.49%–17.99%
  • Fees: None
  • Recommended minimum credit score: 580
  • Other qualification requirements: PenFed will consider your credit history, income and debts when applying for a loan, plus your co-borrower if applicable. 
  • Repayment terms: Term length may be from 6 to 60 months.
  • Time to receive funds: As soon as the next business day
  • Restrictions: You need to become a member of the credit union in order to get a personal loan.

Read the full review: PenFed Credit Union Perosnal Loans

Rocket Loans: Best for Fast Funding

RL

Rocket Loans is part of the Quicken family of companies and now offers same day funding for their personal loans. Applicants can check their initial rate without affecting their credit score and the ability to receive a rate discount by signing up for autopay.

Pros
  • Potential to receive loan proceeds within the same business day

  • Soft credit inquiry when checking initial rate

  • No prepayment penalties

Cons
  • Lender changes an origination fee that’s deducted from final loan amount

  • No cosigners allowed

  • Late payment and insufficient payment fees

Other important information:

  • Maximum/minimum amount you can borrow: $2,000 to $45,000
  • APR range: 7.161%–29.99% with autopay
  • Fees: Borrowers need to pay an origination of 1%–6% origination fee that’s deducted from your final loan amount; $15 late fee
  • Minimum recommended credit score: 580 
  • Other qualification requirements: Applicants need to be the age of majority in their state and a U.S. citizen or permanent resident. 
  • Repayment terms: 36 to 60 months
  • Time to receive funds: Can be as soon as the same business day
  • Restrictions: Individual applications only

Read the full review: Rocket Loans Personal Loans

LendingClub: Best Peer-to-Peer Lending

LendingClub

LendingClub is one of the most reputable peer-to-peer lending companies, helping to facilitate more than $55 billion in personal loans since 2007. The lender offers a pre-qualification option for applicants to check their rates without affecting their credit score, which starts at 10.68%.

Pros
  • Personal loan amounts starting at $1,000 is a great option for those looking to borrow less money

  • LendingClub offers joint loan applications for those who want to boost their chances of being approved for a more competitive rate

  • No early prepayment penalties

Cons
  • Loans aren’t available nationwide

  • LendingClub has longer funding times—can be up to 10 business days—compared to other online lenders

  • Borrowers are subject to origination fees

Other important information:

  • Maximum/minimum amount you can borrow: $1,000 to $40,000
  • APR range: 10.68%–35.89%
  • Fees: 1% to 6% origination fee; $15 late fee or 5% of unpaid balance (whichever amount is more)
  • Minimum recommended credit score: 580
  • Other qualification requirements
  • Repayment terms: 36 to 60 months
  • Time to receive funds: Up to 10 business days depending on form of payment
  • Restrictions: Loans not available for U.S. territories and Iowa residents

Read the full review: LendingClub Personal Loans

Upgrade: Best Personal Loan With a Co-signer

U

Headquartered in San Francisco and founded in 2017, Upgrade offers those with bad credit the ability to take out a personal loan with a co-signer. Many other lenders that allow co-signers tend to have membership requirements or higher rates. Upgrade allows applicants to borrow up to $35,000 starting at a rate of 7.99%.

Pros
  • Applicants can check their rate without it affecting their credit score

  • Funding as soon as the next business day

  • Ability to apply with a co-signer

Cons
  • Lender charges an origination fee

  • Low maximum loan amount compared to other lenders on our list

  • A late $10 will be imposed if borrowers don’t pay within the grace period

Other important information:

  • Maximum/minimum amount you can borrow: $1,000 to $35,000
  • APR range: 7.99%–35.97% with autopay discount
  • Fees: 1.5% to 6% origination fee; $10 late fee
  • Minimum recommended credit score: 580
  • Other qualification requirements: The applicant’s credit history and debt-to-income ratio may be taken into consideration 
  • Repayment terms: 36 to 60 months
  • Time to receive funds: Applicants may receive their loan proceeds as quickly as the business day
  • Restrictions: To receive the lowest rates, borrowers need to sign up for autopay

Read the full review: Upgrade Personal Loans

Your Local Credit Union: Best Payday Alternative Loan (PAL)

If you’re struggling with severe credit problems and need a small-dollar loan to get you through an unexpected financial emergency, a payday alternative loan (PAL) is worth considering. PALs are issued by some federally insured credit unions. You can locate a credit union near you at MyCreditUnion.gov.

The maximum amount you can borrow with a PAL is currently just $1,000. But the interest rate is capped at 28%, making PALs a more affordable option than payday loans and even some online personal loans for bad credit.

Pros
  • Lower interest rates than payday loans and some online personal loans

  • Low application fee is capped at a maximum of $20 nationwide

Cons
  • Small maximum loan amount of $1,000 might not be sufficient to meet your borrowing needs

  • Minimum membership period in the credit union might be required, depending on the lender

Other important information:

  • Minimum/maximum amount you can borrow: Up to $1,000
  • APR range: 28% (current maximum)
  • Fees: Application fee cannot be more than $20
  • Recommended minimum credit score: No credit check required with many credit unions
  • Other qualification requirements: Requirements vary from lender to lender, but may include direct deposit participation, on-time payment history with other loans from the credit union, and verification of employment.
  • Repayment terms: 1 to 12 months
  • Restrictions: You should check with your individual credit union to see if PALs are available and if any restrictions apply

What Is Considered Bad Credit?

The credit scores used by most lenders range from 300–850. If you have a FICO score under 670, you're considered a subprime borrower with a "fair" credit rating, according to Experian. The credit reporting company classifies a FICO score of less than 580 as "very poor."

It's important to understand that taking out a personal loan with bad credit can be quite expensive. Interest rates can often climb into the upper-30% range, based on your credit rating. Other obstacles you could face when you try to borrow with bad credit include lower loan amounts and shorter repayment terms. To help you compare the best loan options available, we've researched more than a dozen personal loans for bad credit. We compared interest rates, fees, qualification requirements, and other loan features.

How Do You Know What Credit Score Range You Are In?

  • Excellent Credit: 800 - 850
  • Very Good Credit: 740 - 799
  • Good Credit: 670 - 739
  • Fair Credit: 580 - 669
  • Poor Credit: under 580

What Interest Rate Can I Expect If I Have Bad Credit?

As a reminder, when you have a FICO score under 670, you're considered a subprime borrower. If your FICO score is less than 580, your credit falls into the "very poor" range.

Every lender sets its own criteria (including credit score thresholds) for loan approval and pricing. That makes it difficult to predict precisely what APR you'll be offered for a personal loan if you have bad credit. Interest rates on personal loans can range from roughly 5.5% to 36%. If your credit rating is poor, you should expect to be offered rates on the higher end of that scale.

You may also come across lenders who promise "guaranteed approval" or "no credit check" for bad credit personal loans. Promises like these should be a red flag. Legitimate lenders never make these guarantees, according to the Federal Trade Commission, or even say you're likely to qualify for a loan before you apply.

Where Can I Get a Personal Loan with Bad Credit?

Getting a personal loan with bad credit can be a challenge. Still, you may find multiple lenders willing to do business with you (albeit, typically at a higher interest rate). If you're searching for personal loan options with bad credit, there are two primary loan sources you may want to consider.

  • Online personal loans for bad credit: Online lending networks take your loan application and connect you with lenders who may be willing to approve you for a personal loan. Often, you can submit one initial form and compare offers from multiple lenders.
  • Direct lenders for bad credit personal loans: Direct personal loans come straight from the financial institution where you’re approved. These may include local banks and credit unions, online banks, and online direct lenders. If you have bad credit, it’s generally best to apply only with direct lenders that are willing to do business with credit-challenged borrowers.

You can find a combination of the best personal loans for bad credit from both types of sources in the guide above.

Personal Loans vs. Payday Loans

When you have poor credit, small payday loans may be easier to qualify for. But they come at a very high cost. The average APR on a typical two-week payday loan of $100 is nearly 400%, according to the CFPB.

If you qualify for a personal loan with bad credit, you may be able to borrow money much more affordably instead of using a payday loan. Even an interest rate near 36%—the upper end of the range for most personal loans—costs far less than the average fees a payday lender may charge.

Additionally, numerous local credit unions now offer payday alternative loans (PALs). These loans may help borrowers with bad credit access more affordable short-term financing. The maximum interest rate on a PAL is 28%.

Personal Loans vs. Personal Installment Loans

In most cases, a personal loan and a personal installment loan are one and the same. Although it's possible to take out a personal line of credit (LOC) when you need to borrow money, a LOC is a revolving account. Most financial experts wouldn't classify a LOC as a personal loan. (Also, if you have poor credit, you may have difficulty qualifying for a LOC.)

Installment loans, like personal loans, get their name because of the way they work. You borrow a fixed amount of money and repay the funds you borrow (plus interest and fees) in fixed payments or installments to the lender. If the lender reports the account to the credit bureaus, a personal loan will generally show up on your credit reports as an installment account. 

Personal Loans vs. Peer-to-Peer Loans

A peer-to-peer (P2P) loan is another way to borrow money that's similar to a traditional personal installment loan. If you qualify for a P2P loan, however, the money you borrow isn't necessarily issued by a bank or lender. Instead, the funds are usually lent to you by an investor or group of investors. Like personal loans, many P2P lenders will report your account to the credit bureaus. Additionally, you may need a credit score of 600 or higher to be approved (though every P2P network and investor may have its own approval criteria).

To apply for a P2P loan, you'll need to submit an application through a website that connects would-be borrowers with potential investors. Yet before you commit (or even apply), you should do some research. It's wise to learn more about the rates, fees, and terms you may be offered and compare those to your other available options. Although P2P loans can sometimes feature more relaxed approval criteria than traditional bank loans, you might face higher interest rates and fees as a tradeoff.

The Bottom Line

Just because you have bad credit doesn't mean you need to turn to a predatory payday lender when emergency expenses arise. Even with credit problems, you should still compare all of your available options because a more affordable solution may be available.

Methodology

Investopedia is dedicated to providing consumers with unbiased, comprehensive reviews of personal loan lenders for all borrowing needs. We collected over twenty five data points across more than fifty lenders including interest rates, fees, loan amounts and repayment terms to ensure that our content helps users make the right borrowing decision for their needs.

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