Where To Get A Personal Loan If You Have Bad Credit. #badcreditloans
If you have a bad, a poor, or a less-than-perfect credit score, you might find it hard to find a personal loan. People with credit scores below 630 can struggle to find the loans that they need. This is the space where it can depend entirely on the company’s algorithm. Where should you turn? What’s the best loan you can get?
That’s the question I want to answer for you today. We’ve spent years in the lending industry and we currently track dozens of lenders. I am going to use that experience to lay out where you should look if you need a personal loan and have bad credit.
I am going to show you the spectrum of lenders that might offer you a personal loan.
On the far left side, we will talk about the lenders who will give you the best APRs. But, they are also going to be the least likely to approve you. As we travel across the spectrum, the options will get more expensive but easier to get. If you have bad credit, there’s two ways to use this information. You can either start from left to right until you find someone who will approve you. Or you can start from right and go to left until you find the best deal you can get.
The point is that this should be the full spectrum of options for personal loans if you have bad or damaged credit. Let’s get at it.
The best option you could get is from a credit union.
Credit unions are member-owned financial cooperatives that provide a range of banking services, including savings accounts, loans, and financial counseling. Unlike traditional banks, they operate on a not-for-profit basis, aiming to serve their members rather than maximize profits. This structure often allows credit unions to offer lower fees, better interest rates, and personalized service.
Because of that, credit unions can offer some of the lowest interest rates for personal loans. They can also approve people who banks might not. But because they are focused on their members, if you have damaged credit and don’t have already have a relationship with them, you are very unlikely to get a loan from a credit union. If you receive your direct deposit into a credit union account, they are much more likely to extend you credit. That being said, I have spoken with credit union executives who think the only reason that payday lenders exist is because people don’t know credit unions exist. They were surprised when I told them that people are regularly denied for credit from their credit union. So, if you have an existing relation with a credit union, you should definitely start with them. They are going to be the best option for you. Some of the national credit unions that offer personal loans include Navy Federal Credit Union and Penfed Credit Union.
Banks are the next best option for you.
Banks are for-profit organizations, so they are about making money. But their rates tend to be lower because they are very closely regulated. That means they are much more cautious about what they will charge in terms of interest rates. Like credit unions, you are unlikely to get a personal loan from them with poor credit unless you have an existing relationship with them. Even then, the chances might be slim. US Bank is one of the only banks that offer micro loans to its members. So, if you are a US Bank customer and need less than $1,000, US Bank is probably your best option.
The next category is finance companies. These are entities that are focused on lending. Some of them have grown and expanded into other things like banking and credit cards. These companies lend more broadly than banks or credit unions. These lenders have APRs that max out below 36%. Some of these companies will lend to people that have credit scores below 630. But, they don’t focus only on credit scores when deciding whether to approve you and for how much. So, if you have recent credit history that is trending in the right direction, they could approve you. Some of the lenders who specifically say that they are willing to people with credit scores in the low 600s include Achieve, Avant, Best Egg, Lending Club, Prosper, Upgrade, and Upstart.
The next category is storefront lenders.
These are companies that have offices around the country, but you can also borrow on their websites. These lenders often keep their APRs below 36%, but they often have other costs that could make the loans much more expensive. Some of them push to buy their insurance, like employment or credit insurance that covers your payments if you lose your job. The cost of the insurance doesn’t need to be disclosed in the APR, so the overall cost of borrowing can be obscured. They also can push you to secure the loan with the title to your motor vehicle. Some of these lenders might also have a reputation to make it harder to pay the loans off early. They are more willing to accept people with less-than-perfect credit, but the trade-off is that you might end up working with a company with uncertain policies or more costs than you expected. Some of the more prominent brands in this category include Mariner Finance, OneMain Financial, Regional Finance, and World Acceptance.
Online Lenders
This next group of lenders are much more dialed in on their policies. These are all online companies that cater to people with less-than-perfect credit. Their policies are often very clear and many of them do not even charge late fees or origination fees. Mostly, these companies do not offer secured loans and they are much more willing to approve people. Of course, their APRs can get expensive. These loans can have interest rates that range from 60% up to 180%. For that reason, if you absolutely have to take one of these loans, it should only be for a very short period. If you can, avoid keeping one of these loans for more than 12 months. Some of the brands we have reviewed in the past that fall into this category include 60MonthLoans, Fig Loans, Money Key, NetCredit, Rise, Oportun, and Opploans.
Payday Lenders
The next group of lenders have traditionally called themselves payday lenders. A payday loan is a loan that is repaid with fees within 14 days…essentially, it’s a loan that is supposed to get you to your next payday. These lenders started out in stores, usually in strip malls. Some of the bigger brands now offer loans online as well. But, there are a lot of different payday lenders out there. A few years ago, someone made the famous assertion that there were more payday loan stores in the US than there were McDonalds. I am not sure that was ever really true, but the point is that there are a lot of stores out there. Each state seems to have their own brands with only a few brands having a semi-national presence. The bigger payday lenders might offer a range of products like installment loans, title loans, check cashing services, and money transfer services. These companies are regulated by the states, so the terms are often different state by state. Just about anyone can qualify for these loans. Payday loans are smaller loans with short terms…and are very expensive. These loans usually have APRs that range from 200% to 700%. Even if they do offer you an installment loan that you can pay off over time, you never, ever want to hold one of these loans for more than just a few weeks. The fees and interest could make getting out of debt very difficult. Some of the bigger brands in this space include ACE Cash Express, Advance America, and CashNetUSA.
Tribal Lenders
The last group of lenders is really similar to the payday lenders, but they are a bit different. These are tribal lenders. These brands lend under the rights of Native American tribes. Because these tribes claim sovereignty, they assert that they do not have to adhere to state or federal regulations. It’s roughly the same principle that has allowed tribes to set up casinos in states that have laws against gambling. These lenders are always online and they are very expensive. The APRs are comparable to payday loans: 300% to 600%. Because of how expensive they are, if you really feel like you need to take one of these loans, you don’t want to hold it for very long. If you do, you will end up paying more in interest than you borrowed. There are a lot of tribal brands out there, here is a little logo salad of some of the ones we track.
If you had perfect credit, you wouldn’t have to wonder who would lend you money. Almost anyone would. If you have less-than-perfect credit, it can feel like you have limited options when you need to borrow money. And that uncertainty is real. For that reason, you need to shop around and make sure you get the best deal you can possibly get. At The Yukon Project, we’ve tried to make shopping around easy. If you go to our marketplace page, you can apply to any one of our featured lenders. Behind the scenes we will check your rate with up to 40 other lenders. Our partners use a soft credit check, so applying won’t hurt your credit score. We will show you all of the approved offers so you can feel confident that you are getting the best deal you can in your circumstances.
If you ideas for other places people should look for a personal loan, please leave a comment below. We appreciate the comments, especially when they are helpful. We are trying to build a community of people at The Yukon Project that can help each other with their experience. We all just want to live the best financial lives we can. And please like this video and subscribe to our channel. It helps us out and we really appreciate it. Thanks for watching.
APPLY! SOFT CREDIT ONLY! YOU SHOULD KNOW YOUR OPTIONS!!!!!
