Getting a loan with bad credit can be a challenge, but it is possible. Banks may offer both secured and unsecured personal loans, but bad credit may only qualify you for a secured loan. This means that you will need to provide a guarantee, usually in the form of a savings account or certificate of deposit, in order to secure the loan. Founded in 1976, Bankrate has been helping people make smart financial decisions for over four decades by demystifying the financial decision-making process and giving people confidence in their next steps.
However, it is important to be aware of promotional rates that are advertised by lenders. These rates are often lower than the rate you can qualify for with a reputable lender, but they will increase when the limited-time offer expires. If you don't have a plan to pay off the loan quickly, rates can skyrocket to 20-30%. Ultimately, the decision lies with the lender you are applying to.
For example, Happy Money requires a FICO score of 640 or higher for approval. If you know someone with good credit, they may be able to co-sign a loan with bad credit. This means that the lender will set the terms of the loan based on the credit rating of the person with good credit, who will then be equally responsible for repayment. Alternatively, there are online platforms that allow you to get a bad credit loan directly from another person or group of people instead of from an institution.
If you are approved for a personal loan with TD Bank, you can receive your funds within one business day and you can receive installments of 36 to 60 months. When considering a personal loan with bad credit, it is important to remember that applying for a new credit card soon after could cause an even greater drop in your credit rating. Additionally, some lenders accept applicants who haven't yet built up a sufficient credit history - such as Upstart Loans who accept FICO or Vantage scores of 600 or higher. It is important to remember that credit ratings are only part of the decision-making process and that lenders can also consider your income, debts, collateral and credit history.
Unfortunately, those with unpolished credit scores often have to pay higher interest rates and other unfavorable conditions when they apply for a loan. However, it is generally best to avoid predatory loans as they can be abusive and often entail exorbitant fees and high interest rates. OneMain Financial's interest rates may be higher than those found at other lending companies with bad credit but they are still preferable to abusive lenders. When comparing loans it is important to consider not only the interest rate but also any fees charged by the lender. It is also beneficial to use Bankrate's personal loan calculator to calculate monthly payments and review your budget in order to come up with a repayment plan.
Additionally, many personal loan lenders allow you to submit a prequalification online in order to find out if you're likely to qualify for a loan and see your estimated loan offers without hurting your credit.