If you have bad credit, and are cash strapped, perhaps you need a car repair, a home repair or some other costly good or service, you may have been looking for a personal loan. We know the hunt for a personal loan lender willing to work with someone with bad credit can be a difficult task, not every lender is willing to look past your credit score and see you as a person who deserves a second chance.
Yet even with lenders who will look past your credit score when deciding whether or not to lend to you, your credit score and hence your credit report, will still come into play. Your credit score is a direct reflection of your financial habits, showing how you have repaid past debts. It shows if you have paid on time, or late, and how often you have missed payments, as well as how much credit you have used out of your available credit. This amounts to the lender possibly giving you a lower loan amount than you had hoped, or a higher interest rate, and hence a higher APR rate. You can expect rates over 20% if your credit is shot.
In an effort to better assist you in finding a personal loan, I have researched 3 options, all of these lenders make loans to people with credit scores under 640. That being said, bad credit has different meanings between different lenders. While some lenders focus on just your credit score, other lenders look past the credit score, and look at other factors, such as how long ago past mistakes were made, your income and your education level. Some lenders today even have scoring models to calculate as best as possible your future potential.
For the best unsecured loans, I have recommended Avant. Avant is a lender that focuses on borrowers with “in between” credit scores, that is credit scores between 580 and 700. Yes this is a rather large credit range, but the good news is that it starts at 580, which is a pretty low credit score. This lender is not a peer to peer or P2P lender, but rather a bank funded direct loan, which means if you are approved for a loan, you will receive your loan funds rather quickly. In fact depending on what time of day you apply, you could see funds on the same day, provided that you stay on top of things and submit any documentation they may request. This lender also does not charge any loan origination fees. For a lender who works with subprime borrowers, they have a rather generous borrowing limit of $35,000, with up to 4 years to repay the loan. These loans are available in 44 states. The down side is that this lender is not yet BBB accredited.
If you are looking to save a little on interest and are willing to secure your loan with some type of collateral, Springleaf may be just the lender you are looking for. Rather than being 100% online however, you have to apply online but then pick up your cash from any one of the 820 branches in many states. This company has a focus on secured loans, however they do have unsecured loan options, but unsecured options will have a lower borrowing limit the first time you borrow from them. They allow loans typically between $1,500-10,000 if you have bad credit, but if your credit improves they do have higher loan amounts. They do make loans to people with credit scores under 600, especially when you put up collateral. The APRs tend to range from 25% to 36%, but your credit score and credit report may qualify you for a lower amount. This lender has over 90 years in business experience as a lender, and is A++ accredited with BBB, so you know you are dealing with a lender who has a rock solid reputation. This lender is available in 41 states, so before applying make sure that this lender does business in your state.
If you have had trouble elsewhere, you may want to consider this peer-to-peer lender, Peerform. Peerform has pretty liberal credit standards, as they will accept borrowers with credit scores as low as 600. They allow for loans of up to $25,000, which is high for a lender who works with borrowers who have subprime credit. They are very transparent about the APR ranges and fees on their website. The downside is that it can take upwards of two weeks to get your loan funded. There is also the fact that you could face a origination fee of up to 5% of your loan. They are also not accredited by BBB, and there are quite a few fees attached. This is rather a last resort lender in my opinion and only if you are not in a rush to receive your funds.