No matter how careful we plan, there is always an unexpected expense that comes up. When personal loan lenders review your credit score and find collections or past bankruptcies, they may not be interested in offering a personal loan, that is when consumers start searching for bad credit loan offers. America Loan Service has been providing bad credit loan information to America for many years now. We are the go-to resource for bad credit financial help when all other funding sources are not calling you back.

When the credit score falls below 590, it can be hard to find a quality lender. As long as your credit score is above 550, you can probably get approved if you are in not buried in collections.

Before you apply, read reviews of the top bad credit lenders. Once you understand what you're in for, get your loan offers. Word of warning - you won't get the best interest rates out there. Some people opt to boost their credit scores for free, but if you need the money fast, that's not always an option.

A bad credit loan is an unsecured or secured personal loan that has a higher chance of default because of the applicant's history, low credit score or no credit history.

Traditional lenders are unable to quote on bad credit loans when credit requirements do not meet the minimum credit score ranging from 590 to 640 set by national lending institutions. Lenders like LendingPoint will accept loan applications with a 590 credit score.

Bad Credit Loan Offers

Where to Apply for a Bad Credit Loan

Some of the bad credit loan providers below list that "any credit score can request a loan" and do not use traditional credit scoring in the application process. The lenders focus on the borrower's employment history and monthly income other than credit score. The private lenders provide smaller loans with shorter terms than standard unsecured personal loans with higher interest rates to offset the risk. In most cases, they will not exceed $1,000.00 without security. 

Bad Credit Loan Challenges

The most common reason to be denied a bad credit loan is your credit score or credit history has late or delinquent payments. Loan providers complete a soft pull on your credit score, and if it's below their established credit risk, the lender will not proceed with the loan application. Many lenders will not review the loan application past the credit score.

Your credit score is defined as "bad" when it falls below 590. While credit scores can range anywhere from 300 to 900, most people fall somewhere between 650 and 750, which coincides with "fair" to "good" credit. The national average in the USA is sitting at 703.

Here's a table to help you to figure out what type of credit you have:

Excellent Credit Scores: Over 750
Good Credit Scores: 700 to 749
Fair Credit Scores: 590 to 699
Bad Credit Scores: Less than 590

If you have a bad credit score, you're not entirely out of luck. A huge market exists for lenders looking to provide bad credit loans, but there is a pretty strong downside - interest rates range from astronomical to somewhat reasonable options.

So You've Got Bad Credit?

A lot of people have bad or poor credit in the United States. According to Experian's Vantage Score 3.0 data, up to 30% of Americans have bad credit. Converting that to the raw numbers based on the current US population, this equates to over 100 million Americans with bad to fair credit scores. Let's say that if you've got bad credit, you're in a massive club.

Here's the good news: where demand exists, so does supply, and the quantity of bad credit loans is significant, but there is a catch.

When the Banks say NO

If you were to walk into a bank and request a loan for bad credit, nine times out of ten you will be turned down. Traditional banks don't play ball with bad credit borrowers. They follow strict guidelines, and a local lender is not able to step outside of the rules set throughout America.

While traditional banks may say no, online lenders have swept in to fill the void. In recent years, the online lending community has begun to flourish. Bad credit borrowers are providing loans where the traditional banks refuse but remember, "buyer beware" with bad credit loans. If your credit score is below 590, you can expect to pay higher interest rates, only have access to loans under $5,000 and have a shorter repayment term.

Traditional banks are declining bad credit customers for a reason - bad credit equals high risk, and high risk equals higher rates of default and a higher possibility of lenders losing their investment. Even a more significant expense to the big banks is the staff required to try to manage and collect when their customer is unable to repay the loan.

It's apparent that online lenders play by slightly different rules than regular banks. Many don't have real offices. They don't have the expense of customer service employees like traditional lenders. They don't have to pay utilities. In short, they operate with lower overhead.

Online lenders are in a position to provide loans with lower rates, but do they? Even though these online lenders have a competitive advantage and provide convenience, the interest rates that they charge are very high to cover the risk. Yes, you can "get a loan without leaving the comfort of your own home," there is a high price tag on this loan with interest rates exceeding 100% in some cases.

Monthly payments with bad credit

Before applying, figure out your monthly payment with bad credit. Here's how to calculate your monthly payment and what you can expect from a bad credit loan.

With good credit, you can get a loan with about a 5% interest rate right now. On a $1,000 loan, your payment would be roughly $18/month.

That very same $1,000 loan with bad credit would cost you over $26/month! That's over 40% MORE per month. That assumes an interest rate of 20%, and that's on the LOW end with bad credit.

Good news though - Bad credit is temporary. It might feel like it, but it will change in time. If you want to improve your credit score and get out of debt, we've got a great post about it here.

To calculate your monthly payments on a bad credit loan, use the calculator below. Expect interest rates of 20%+ APR.

What will your payment be?

As you know, bad credit loans can have high rates, but just how high are they? Take a look at what your monthly payment would be on a $5,000 loan with bad credit.

Credit Score Interest rate        Monthly payment
Bad credit (<550)   30% $161.77
Fair credit (650-699)   15 $118.95
Good credit (700+)        7 $99.01

As you can see, it's expensive to be poor. With bad credit, you end up paying $161 per month for a $5,000 loan over five years. The very same loan with good credit would cost more like $99 per month.

The total difference in interest over the 5-year term? $6,035. 


Payday Alternative Loans (PAL's)

The credit unions have developed a program called PAL's to help people stuck in revolving payday loans. The credit union will want you to become a member for a few months before this program can be implemented. 

PAL's features:

  • Loan amounts $200 to $1,000.
  • Must be a credit union member for one month
  • Loan terms range from 1 to 6 months
  • There may be a fee for setting up the application of $20.00
  • Contact your local credit union to get some help.

What is the Concern of a Bad Credit Loan?

Credit Score

Will the borrower makes payments on time and will the lender get their money back? Is the lender's profit worth the risk of trying to collect?

  • The credit score is lower than accepted by lenders 
  • The credit score below 590

No Credit History

Just starting in your life, heading off to college, university or your first job

  • No credit history is an issue when starting in your career and applying for the first loan or credit card
  • Not had time to establish a credit history

Credit History

Time creates a credit history. Making payments on time month after month

  • Credit history demonstrates if the borrower makes their payments on time
  • Your credit score has dropped from nonpayment
  • Loan or credit cards have gone to collections
  • Vehicle or other asset repossessed
  • Missed credit card payments, may have gone to collections

High Debt to Income Ratio

Can you manage another payment with the debt you already have?

  • Debt to income is monthly income before taxes divided by your monthly payments.
  • If the debt to income percentage is above 50%, lenders are concerned that your income cannot support the loan payment

Employment

Lenders are looking for long-term  stability

  • The lender will review current work history
  • May request pay stubs for proof of employment

Debt Relief and Debt Settlement

Take a look at debt relief and debt settlement before you take the step of more loans. Bad credit loan providers traditionally cap their loans at $5,000.00 but do expect these loans to be anything more than a larger dressed up payday loan. In the end, you will be trapped and a bit further in debt. So what is the answer? 

Help and Advice on Debt Settlement Services, Debt Management, and Debt Negotiation

Credit Score's Can Improve

Just because you have bad credit today does not mean you have to stay in this position. With discipline, you can raise your credit score over time if you can stay focused on a few key items. If you require help with getting organized, Novita is a great choice to start the process of getting your credit score back in order.

Once your credit score increases, you should expect an improved interest rate, better loan terms and access to the best credit card services with fair interest rates.

By starting to pay all of your debts on time, you will start to pull yourself out of the bad credit category. There are three credit bureaus that provide credit reporting; they are Equifax, TransUnion, and Experian. This group of credit bureaus offers a free service called Aunnualcreditreport.com where you can get a free copy of your credit report every 12 months from each credit reporting company. Once you have received this information, you will start to have a better understanding of what these reports look like and what information your creditors are reporting your credit history to the lenders.

Your credit score is your financial report card showing the history of payments like credit lines, secured and unsecured loans, mortgage and credit card information.

Secured Credit Card

You see many credit cards advertised with travel miles, cash incentives, and rewards. When you have bad credit, you're looking for solutions to pay off the credit cards you already hold, the lowest interest rate available and which credit card to cancel first. This is usually a simple process of which one has the highest interest rate and how fast can you pay it off. Try to keep your oldest credit card whenever possible. Your oldest credit card will help your credit score with your length of credit history.

  • No Credit History or Minimum Credit Score Required for Approval
  • Monthly Reporting to all 3 Major Credit Bureaus to Establish Credit History
  • Credit Line Secured by Your Fully-Refundable Deposit of $200 -- $2,000 Submitted with Application
  • Nationwide Program though not yet available in NY, IA, AR, or WI

    

Unsecured Credit Cards

Get the security and convenience of a full-featured, unsecured VISA® Credit Card – accepted at millions of merchant and ATM locations nationwide and online.

  • Checking Account Required
  • Reporting monthly to all three major credit reporting agencies
  • Perfect credit not required for approval; First Access may approve you when others won’t
  • Easy and secure online application
  • If approved, pay a Program Fee and you can access the $300 credit limit (subject to available credit)
  • The First Access Visa Card is issued by The Bank of Missouri pursuant to a license from Visa U.S.A. Inc.

Credit Card Hardship Program

You can call the hardship department with credit card providers and request a new payment plan. Depending on the circumstances, the credit card provider may suspend use of the credit card until it's paid off in full. This is a much better step than letting the credit card go to collections.

If you are in a position where you cannot get a credit card, a secured credit card may be a good solution to help build your credit score. This card requires a cash collateral deposit that serves as a credit line for the account. The credit card provider will report your payment history to the credit reporting agencies. This will allow you to rebuild or improve your credit score if payments are made on time and by keeping the balances low about the credit limits. Most credit card companies will review your account starting at approximately six to eight months to see if we can transition you to an unsecured line of credit.

Balance Transfer Credit Card

If you have fair credit and considering debt consolidation, a 0% balance transfer credit card is a quick way to clear high-interest expense instead of taking out a personal loan and paying interest now.

Secured Loans

Secured Loan Types

• When you take out a Mortgage, the home becomes the collateral or security for the mortgage. If the borrower defaults on the agreed upon the monthly payment, the mortgage provider can place the home into foreclosure and the borrower would lose their home

Auto Loans are also secured loans. Like a mortgage, the car becomes the collateral or security for the loan. If the borrower defaults on the monthly payments, the car can be repossessed by the lender.

• A car title loan or auto refinancing is also a secured loan. If the borrower owns a vehicle that you have paid off or has some value or equity that a lender can use as collateral or security, the title loan or auto refinancing is secured against the equity you have built up in the vehicle. There are a lot of very unreputable providers in the title loan industry. Be very careful with title loans, and some loan providers want you to default so they can take your car and resell it

• A secured credit card is a secured loan. The credit card company will require the borrower to place cash on the credit card, and that cash becomes the collateral or security and guarantees the loan. Credit card providers offer secured credit cards for people trying to rebuild their credit score. For anyone struggling with improving your credit, a secured credit card is a positive step in the right direction to improving your credit score 

Benefits of Secured Loans

If you can take out a secured loan, there are many benefits to going this route with the biggest one being lower interest rates. When you obtain the loan with your home or auto, you are taking all the risk and should get an excellent interest rate as well as the terms of your desire. The length of the loan may be a 5-10-15 year loan term, "whatever you want" should be the lender's response.
The banks will typically look at a 65% to 80% appraised loan to value to determine what amount of secured loan they are willing to offer.

Example of an 80% loan to value loan: If a Home is valued at $400,000 and you have a mortgage of $200,000, you want to borrow $100,000 against the property. The bank hires an appraisal, and the property is appraised at $400,000.

If you have an excellent credit rating, the lender may approve 80% of the value or $320,000 as of the risk they are willing to take with the property.
The bank believes they can sell your home for a minimum of $320,000 to get their money back in case of default. The bank is willing to loan you $120,000 based on an 80% appraised value. If the bank is forced to foreclose on your home, they place the property on the market and try to get at least what is owed to them plus legal and any fees that were related to the sale. 

A secured loan example with bad/poor credit. The lender is willing to risk 65% loan to value. The bank reviews your credit history and sees a higher risk of defaulting on the loan. Like our last example, the homes appraised at $400,000 with a $200,000 mortgage and looking for an additional $100,000. A 65% loan to value is $260,000. With your existing $200,000 mortgage this lender would offer you a $60,000 loan against your property. With the $400,000 appraisal, the lender feels secure that they can sell your property for close to $400,000 and get their money back.
As you can see from both examples, there is a minimal risk for the lender. If you have great credit, demand an excellent rate and the terms you expect.
This final percentage range will be determined on your credit score and credit history as to how much risk lenders are willing to take with every person applying. If you have awful credit, some lenders will not offer you any loan amount regardless of your equity, leaving you in position to sell your home to get access to your capital.
If you have applied for an unsecured loan already, you should expect the unsecured loan to be at a higher interest rate unless your credit score is excellent.
Like any other loan, if the payments are made on time and the loan is paid off in full, a secured loan with improving your credit score and build your credit history.
Most secured loans are taken out for home improvement renovations on the property you're using for collateral. This is a wise method of financing home improvements and increasing the value of your existing property.
Make sure to work with the lender on your debt to equity ratio. Most banks will allow 32-35% as their debt to equity ratio (DTI). If you are unsure of your DTI, this calculator will help you calculate your DTI.
Make sure you feel comfortable taking on this additional debt. Think about holidays, emergencies and all types of surprises that life always throws your way before adding on more monthly debt.

If you have accumulated debt with high-interest credit cards, bad stock purchases, medical bills, weddings, student loans or any other expense that has come up, using the equity in your home is a great way to apply for debt consolidation.

Negative Side of a Secured loan
There can be is a large cost to applying up a secured home loan. When a borrower takes out your original mortgage, you paid fees to have the property appraised, legal fees for setting up the mortgage as well as disbursement and registry fees. (I think they make some of these up)
The loan type can be a home equity line of credit (HELOC) which is simply a revolving credit line that you can draw against or a home equity loan that should really be called a second mortgage. Both have their advantages.
A revolving line or HELOC has fewer fees to set up and you only pay interest for the first 10-15 years depending on what you negotiate for repayment terms. This again can be very good or bad depending on your ability to manage debt.
A home equity loan provides a set payment structure and the fees to set up will be very close to the same cost as when you bought the house for legal and appraisal. If you are concerned with your ability to manage money, the home equity loan may be your best way to go. The loan is fixed with a lower interest rate and paid off over the next 10 years. With a HELOC, you could be just starting to pay the principal in 10-15 years
When you take out a secured loan, you increase the risk of losing your home if you default on the loan. With an unsecured loan, you will pay a higher interest rate, but they cannot take your property. Also, consider this, if you take out a $100,000 unsecured personal loan, a bank can take you to court, and force you into bankruptcy at which time they will sell your home to pay off your debt. Regardless of how you borrower, repayment is key.

Auto Loan and Auto Loan Refinancing

If you have a vehicle that is paid off or has considerable value, you can look at auto loan refinancing.  This type of refinance becomes a secured loan when using your vehicle as collateral. When you use your vehicle as collateral, you are offering the loan provider a great deal of security, and you should be able to get a good interest rate on the loan your applying for.  

Bad Credit Auto Financing

If you are searching for an auto loan from $3,000 to $45,000, look no further.  This auto loan provider specializes in auto loans for any credit score. Give them a try today. Auto loans -- Bad Credit? No Credit? No Problem!

Secured Auto Purchase and Refinance

LendingTree offers hundreds of auto lenders that will help you buy the new car or refinance your existing vehicle.  This can be a great way to get capital out of an asset. This provider can refinance your vehicle and get your capital back to you.

Staying Away From Payday Loans

There is still only one solution with bad credit, and that is repairing your credit score before you attempt to borrow more money. The last thing people want is advice on how to fix their credit score in their time of need. Credit repair takes time, and consumers are looking to buy groceries and pay rent? They are applying at dozens of lenders at a time trying to get through to their next paycheck. Payday and high-interest installment loan providers step in and take advantage of people when they are desperate. There are a few lenders that are not charging payday loan rates.

Debt Management

For most Americans, debt is a part of life and helps us with important investments like improving our education or purchasing a home. Household debt in America has continued to rise for the 16th straight quarter with no sign of change, and many Americans are already struggling to make their student loan, credit card and mortgage payments.

Here are a few budgeting tips before you make your next purchase:

Let's build it ourselves

Youtube has changed the world for making all sorts of furniture, repairing things yourself or completing a construction project. You can save thousands of dollars if you give it a try. 

Swap it

My daughter has become a pro at this. They trade things with their friends and neighbors. They get together with a large group, and everyone brings items that they do not want any longer. It can be clothes, furniture, dishes, artwork, and the list goes on. It is like an old style swap meet, but its all about trading or swapping. This is also a great way to clear out the garage and declutter the house.  

Can we live without it or can we wait for a sale?

How many times have you purchased something and realized you bought it without really thinking about what you were doing or why you were even buying it? We are all guilty of using shopping to cover up for some feeling that is not quite sitting right inside, and we use shopping as a distraction. 

A simple solution for buying over feelings is to wait. Yes wait for one or two days and walk away until you can get yourself grounded in your thinking and figure out why you're buying any item that you may not need. If you do decide to purchase the item after you've taken some time, now you can look online and start hunting for a sale before making the final purchase.

Thrift stores

Thrift stores are becoming a fun way to spend an afternoon with friends to go digging through second-hand items. Children clothes, baby furniture, and toys are one of the best items to find second hand. Many stores are now specializing in second-hand items like skates and sporting equipment. Charities like Habitat for Humanities have excellent furniture and building supplies with excellent prices. 

Can we ask someone to loan it to us? 

If you are working on a construction project, building a craft, going on a road trip, is there anyone you can borrow a tool, craft supplies or a car for a trip? Tools are expensive, and they sit forever on the shelf and only get used a few times a year. Many families have two cars and can loan you one for a short time. Make sure to tell them to come to borrow someone from you when they need something for a short time.   

Skip one item

Purchasing a coffee thermos could save you over $1200 per year. Sounds crazy right? If you purchase a Starbucks every day for work, this cash can be in your pocket. Love your Starbucks, we understand. How about skip eating out for a few months and start cooking at home. Something has to give, and you decide what that item is your willing to skip

Bad Credit Loans Monthly Payments

If you are applying for a bad credit loan, you already understand how difficult life becomes after you have damaged your credit rating. The monthly payments of your bad credit loan should be your first priority when considering a bad credit loan.

Bad Credit Loan Terms

When you are working on calculating your monthly payment on a bad credit loan, the rules with bad credit loans are a bit different from traditional unsecured personal loans. Lender review repayment history and your credit score and these items are very typical for bad credit loans

  • The repayment terms are under 36 months
  • The interest rate is over 15%.
  • Most bad credit loans are capped at $5000

Estimate Payments

Extending the term of a loan will lower your monthly payment. you can see in this example of the amount of interest paid for this $5,000 loan.

  • If you are taking out a $5,000 loan at 15% interest over 12 months, your monthly payment will be $451.29/month you will only spend $415.50 in interest payments
  • If you are taking out a $5,000 loan at 15% interest over 36 months, your monthly payment will be $173.33/month and you will spend $1,239.76 in interest payments

This decision on the monthly payment should come from reviewing your current monthly debt load to see if you can manage another monthly payment. This simple debt to income calculator will help you see if you can manage additional debt. Try to keep your debt to income below 50%. When you apply for your loan, this is what the lenders are calculating, can this borrower afford the monthly payment?

Installment Loans for Bad Credit

An installment loan is a nice way of saying that you agree to make a fixed monthly payment over the set length of the loan term. The word installment from a financial definition means a sum of money due as several equal payments spread over an agreed upon time period.

Monthly Installment Loans for Bad Credit

Once you apply for a monthly installment loan for bad credit, the lender will review your credit score, annual income and review your debt in comparison to your income to calculate the amount they can offer you, the term you may qualify for and the interest rate they are willing to offer.

The first step will be to find out what your current credit score is today. Once you have determined your score, you will know if you are applying for a bad credit loan or a personal loan with good to great credit. 

There are lots of installment loan providers online that may be a bit more flexible and we have many listed above for you to review. A rule that you will want to consider when applying for a bad credit installment loan is to apply for less than $1,000 if your credit score is below 580.

If you need more than $1,000, we recommend working on your credit score first, then reapplying again after you have seen some improvement. A few simple ideas will increase your credit score very quickly.

Installment Loans Bad Credit

If you have checked your credit score and know that you have bad credit, you need to consider a few things before applying for an installment loan specifically for bad credit. 

  1. Have you already applied everywhere? If you have, you need to stop applying. Every time you apply, all of the lenders know that you have applied multiple times. Lenders need to know this information in case of fraud. If lenders were unaware of people applying 25 times and getting money from 25 lenders at the same time, they would be an issue. Stop applying and work on whatever the issues are with your credit score or current work situation
  2. Do you have collections? If you have collections, best to deal with the collections agency before applying. Your credit score will display the details of the collections, and it will show you are in default. Lenders look at this as a bad credit high-risk loan and may not be interested in lending to you.
  3. Do you have late payments or default? Make sure to get up to date on any late payments. If this is your first time being late, contact the lender and ask them if they will remove the late charge on your credit score. They may only do this once, so do not make it a habit.
  4. Maxed out credit cards? If your credit card is maxed out and you are paying a high-interest rate, contact the same credit card company and ask if they have a low-interest credit card with no rewards or points. You only want a lower interest rate to increase your ability to make a payment against this card every month. 

If you want a loan for more than $1,000 with bad credit, you need to check off these points before applying for a loan. 

Debt Consolidation Loan Bad Credit From a Direct Lender

America Loan Service works with hundreds of direct lenders that offer bad credit loans for every situation including debt consolidation. We are contacted by consumers every day asking if they can speak directly to the lenders so they can explain what happened to them and how they got into their current situation. 

In most cases, online lenders work through companies like America Loan Service to process leads on their behalf, and the direct lenders focus on underwriting the loans. 

Direct lenders are processing credit applications and searching credit history, employment history to confirm if they can provide loans to thousands of people. The people that manage this process are normally called underwriters. Underwriters analyze risk factors on behalf of the banks, credit unions, and direct lenders. The underwriter's career success rate is based on offering loans that are repaid on time and in full. 

The purpose of a debt consolidation loan is to pool all loans, credit cards, and any other debt together under one loan and hopefully find a loan with a lower interest rate.

An unsecured bad credit loan is normally capped at $5,000 with a higher interest rate and shorter repayment term. All three of these conditions cause a problem with debt consolidation. 

Anchor
  1. “Payday and Car Title Lenders Drain $8 Billion in Fees Every Year” Center for Responsible Lending. Acquired May 8, 2018 - “Payday and Car Title Lenders Drain $8 Billion in Fees Every Year” Center for Responsible Lending
  2. Why loans are capped at 36% NCLC acquired May 2018 - Why loans are capped at 36%
  3. McDonalds’ vs. Payday Lenders California State University Northridge. Acquired. May 4,2018 - McDonald's Restaurants vs. Payday Loan Locations
  4. Consumer Financial Protection Bureau (CFPB) Submit a Complaint - Consumer Financial Protection Bureau (CFPB) Submit a Complaint acquired May 2018