4 Best Personal Loans for Bad Credit (Not Payday Loans)

4 Best Personal Loans for Bad Credit (Not Payday Loans)
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Ashley Dull
By: Ashley Dull
Posted: March 29, 2018
BadCredit.org's popular "How-To" series is for those who seek to improve, rebuild or better understand their subprime credit rating.

Some of life’s “emergencies” aren’t quite as pressing as we think. Your teenager won’t actually die without those new jeans (no matter what they insist). Some emergencies, however, are truly matters of concern — like your only car throwing a rod and needing immediate automotive surgery.

If you need a personal loan but don’t want a payday loan, you are generally looking for a personal installment loan. These loans are repaid in monthly payments and are usually much more affordable than short-term or payday loans. With poor credit, finding a lender can be a challenge, so be sure to do your homework before you borrow.

Top Providers | Payday vs. Installment Loans

The Best Personal Installment Loan Providers for Bad Credit

The biggest reason those with poor credit tend to turn to short-term loans is the ease of obtaining one. But you may end up paying big for that convenience. If you can qualify for an installment loan instead, that’s almost always the better route. One of the easiest ways to find a flexible lender is through an online lending network.

Online lending networks can connect you with hundreds of lenders from across the country, increasing your chances of finding a compatible lender. While each lender will have its own specific guidelines for credit and income, most will share the same basic requirements, like needing a regular source of income and an active checking account.

   
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Loan Amount Interest Rate Loan Term Loan Example
$500 to $10,000 5.99% - 35.99% 3 to 72 Months

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CashUSA.com offers personal loans of up to $10,000 for qualified applicants. To qualify for a loan through CashUSA.com, you’ll need to have a steady monthly income of at least $1,000, after taxes. Funds can be distributed as soon as one business day after you complete your loan.

BadCreditLoans.com borrowers can obtain personal installment loans of up to $5,000, based on their creditworthiness, though the site states that those with poor credit are unlikely to receive offers above $1,000. BadCreditLoans.com doesn’t post a minimum income requirement, but you’ll still need to have a regular income.

PersonalLoans.com lenders offer loans up to $35,000 for those who meet the qualifications. While there are no specific credit requirements, the site does state that those with recent delinquencies or bankruptcy discharges may not qualify. The typical loan obtained through PersonalLoans.com requires a monthly income of at least $2,000.

SignatureLoan.com loans range from $1,000 up to $35,000 for the most qualified applicants. The site has no specific income or credit score requirements and claims you don’t need perfect credit to get a loan from a SignatureLoan.com lender. That said, it’s safe to assume you’ll still need a regular income to qualify.

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The process of using an online lending network to get a loan is simple, requiring you to fill out only a single application to receive up to the network’s maximum number of offers (usually four). Although you’re not guaranteed to receive the max number of offers — or any offers at all — lending networks may give you the best chance.

If you want to accept a loan offer presented through the network, you’ll be directed to the lender’s website to complete the process. There, you’ll need to carefully read all the terms of the loan offer before accepting the terms and digitally signing the agreement.

Depending on the lender, you should receive your funds within a few days, though it could vary from one business day up to several weeks. Funds will typically be deposited into the checking account you specify during the loan process, and they can then be withdrawn as cash, spent via your bank card, or used to make payments and purchases online like any other funds.

The Difference Between Payday Loans & Installment Loans

Payday loans are a type of short-term cash advance loan that is often set to be due on (or shortly after) your next payday, meaning they usually last two to four weeks. Payday loans can be a strong temptation for many poor-credit borrowers because they offer quick money — often almost immediate — without a lot of credit-related hassle.

But like most things that sound too-good-to-be-true at first, payday loans aren’t a good answer for most financial problems. Payday loans can mean a heap of trouble down the line if you can’t muster the funds to repay it. And that means all the funds plus fees, which is the first major downside of payday loans.

Map of Payday Loan Legality in the US

Several US states have banned payday loans entirely, while others have put legal restrictions on them.

In fact, payday and other short-term cash advance loans are so expensive and potentially dangerous that some states have banned them completely. Many other states have strong restrictions on payday loans, though some unscrupulous companies can often find loopholes that allow them to still overcharge or over-lend.

Unlike installment loans, which are repaid through bi-monthly or monthly payments, short-term loans, including payday loans, are generally repaid in a single lump sum. You’ll not only need to pay the entire principal amount (what you borrowed), but you’ll need to pay any and all finance charges, too.

Those charges are no joke, either. The typical annual interest rate on a payday loan is in the three digits, with finance charges usually ranging between $10 and $30 per $100 you borrow, depending on your credit and the length of your loan. It’s the high fees that can be the biggest danger of a payday loan.

A payday loan with a $20-per-$100 fee will have an APR of 520% — more than 14 times that of the most expensive personal installment loans.

For example, a payday loan with a $20-per-$100 fee will have an APR of 520% — more than 14 times that of the most expensive personal installment loans, which legally max out at a rate of 35.99%. And that’s assuming you don’t pay extra finance fees to extend your loan if you can’t repay it on time (which is really the most likely scenario).

Improve Your Credit to Increase Your Loan Options

When you have a financial emergency that can’t wait, you may be tempted to use any loan you can get your hands on — particularly if you have bad credit. But before you turn to a payday loan or other pricey short-term cash advance loan, you should try to obtain more affordable financing through a personal installment loan.

With an installment loan, you’ll not only have a significantly lower interest rate, but you’ll be able to make regular monthly payments and be more likely to stay on track. Plus, those regular payments can also help you boost your credit score when you make them on time each month. This can help ensure you’ll have an easier time finding the financing you need in the future.

If you can’t qualify for a personal installment loan due to your bad credit, you should still explore every other option you have before taking on an expensive and potentially dangerous short-term loan. That includes consumer credit cards, as even the worst subprime card will charge less interest than a payday loan.

A number of issuers offer credit cards for poor credit with (comparatively) reasonable APRs and credit limits of $300 or more. Furthermore, you can repay your credit card balance through regular monthly payments like an installment loan, and your minimum required monthly payment can be fairly low.