5 Best Bad-Credit Personal Loans (for $5,000 & Up)
Having bad credit can make it harder to qualify for a personal loan, especially if you need to borrow a larger amount of money. However, there are a number of lenders that offer personal loans of $5,000 and up to people with bad credit.
5 best bad credit personal loans guaranteed approval $5,000 & up
Regardless of your credit score, no lender can truly guarantee approval until they review your application. While some lenders may review your credit file, others will approve you based on other factors, such as your employment history and income.
Depending on your creditworthiness, you may be able to find a personal loan through a local bank or credit union. If you have bad credit, however, you probably have a better chance of getting approved for a personal loan up to $5,000 with an online lender.
Some online lenders service loans themselves, while others are loan marketplaces that connect borrowers with a network of banks and lenders. If you have bad credit and need a personal loan $5,000 and up, here are five online lenders to consider.
CashUSA is an online loan marketplace that lets borrowers connect with lenders that offer loans up to $10,000, even with bad credit. To qualify, you'll need to earn at least $1,000 per month and provide other information depending on individual lender requirements.
According to online reviewers, CashUSA processes loans quickly, with many people receiving their funds within one day. You can choose from a variety of loan terms, including repayment periods up to 72 months.
BadCreditLoans.com is another loan marketplace (also known as an aggregator) that matches borrowers with a network of lenders. It's free to apply, and there is no obligation to accept a loan offer.
Borrowers with bad credit may qualify for loans up to $10,000, but approval depends on each individual lender's requirements and criteria. Interest rates vary, with a range between 5.99% and 35.99% depending on your creditworthiness.
If you need to borrow a larger amount of money, it's worth checking out PersonalLoans.com, which allows borrowers to request up to $35,000. If your credit is poor, however, you might be restricted to a lower loan figure.
PersonalLoans.com is a loan marketplace, so you'll receive offers from a variety of lenders. Interest rates vary from 5.99% to 35.99%, and repayment terms can be as short as 90 days or as long as 72 months.
Monevo is an online loan marketplace with a network of 30 lenders, many of which are willing to work with borrowers who have low credit scores. Loan amounts can go as high as $100,000, with interest rates varying between 3.49% and 35.99%.
According to Monevo's site, it uses technology to submit your information to lenders in real time, so you don't have to wait to find out which lenders are willing to make you an offer. This can speed up the application process, giving you access to funds the same day.
Avant is different from many other lenders in that it states explicitly that borrowers need a minimum credit score of 580 to qualify. Interest rates vary between 9.95% and 35.99%, and you can request anywhere between $2,000 and $35,000.
There are no fees to apply for a loan through Avant, and Avant does not charge loan origination fees or prepayment penalties. Avant also reports to all three credit bureaus, so you can use your loan to help build your credit score.
What are bad credit personal loans with guaranteed approval $5,000?
If you have bad credit, you should be realistic about the loan process. Specifically, you will almost certainly pay a higher interest rate compared to someone with a better score.
This is because lenders charge higher rates to offset the risk you pose as a borrower. Statistically, the lower someone's credit score, the likelier they are to fall behind on payments or default on their loan.
However, bad credit personal loans are typically much more affordable than other types of lending, including payday loans and title loans. The latter can have interest rates in the triple digits, and they are generally short-term loans with low borrowing limits.
Eligibility criteria for a bad credit personal loan for $5,000 and up will vary from lender to lender, so it's important to review each lender's requirements before you apply. With that in mind, most lenders require borrowers to meet the following criteria:
At least 18 years old
Earn a minimum income each month (often $1,000 or more) through employment or benefits
Be employed or receiving benefits for a certain period of time
Have a bank account
No recent bankruptcies
Generally, the more you want to borrow, the more stringent the lender's eligibility criteria. In addition, some lenders are more flexible than others, and you might find one or two willing to approve you even if you have a recent bankruptcy or very poor credit.
Tips for guaranteed approval
Keep in mind that no reputable lender will guarantee approval before reviewing your loan application. However, there are several things you can do to improve your chances of qualifying for a personal loan.
Check your credit report - A study from the Federal Trade Commission (FTC) found that 1 in 5 Americans has a mistake on their credit report that could be unfairly lowering their score. You can get your report for free and review it for errors, which you can dispute and get removed.
Pay down debt - Paying off your debts improves your credit utilization, which is the ratio between your available credit and how much credit you're using. You should try to keep your utilization rate below 30 percent, which will help improve your chances of getting approved for a personal loan.
Use a cosigner - If your credit is bad, you can often increase your chances of getting approved for a personal loan by having someone with good credit cosign. Not all lenders allow cosigners, however, and your cosigner will be on the hook for the balance of the loan if you default.
Know the eligibility requirements before you apply - Applying for too much credit at once can cause hard inquiries to accumulate on your credit report, which can lower your score. Knowing each lender's eligibility criteria before you apply can help you weed out loans you're unlikely to qualify for, so you avoid wasting time or hurting your credit score.
Pros vs. cons of loans for bad credit
There are pros and cons to bad credit loans. It's important to understand what you're getting into before you apply, so you don't take on a situation that further damages your creditworthiness.
Apply online - Most bad credit lenders offer online applications, and you can usually receive your funds without visiting a brick and mortar location. This makes it possible to apply for loans from a wider range of lenders.
Bad credit okay - Obviously, the lenders willing to work with borrowers with bad credit are more flexible when it comes to credit score requirements.
More affordable than alternative types of borrowing - Bad credit personal loans are generally much more affordable than other forms of lending, including payday loans and title loans that typically charge usurious interest rates that can trap borrowers in a cycle of debt.
High APR - Perhaps the biggest downside to a bad credit loan is the likelihood of a higher annual percentage rate (APR). Depending on your credit score, you can expect to pay a much higher rate compared to someone with a more favorable score.
Watch out for scams - Unfortunately, having bad credit can make you vulnerable to scammers and lenders that prey on people who find it difficult to get approved for a loan. As you shop around for loan offers, make sure you thoroughly research each lender to make sure they are trustworthy and ethical.
How to apply for bad credit personal loans
If you need a bad credit personal loan for $5,000 and up, you can apply by following these steps.
Shop around - Start your search by doing side by side comparisons of various lenders so you can be certain you're getting the best deal for your financial situation.
Submit applications - When you're ready to apply, gather all your personal and financial information and submit your application. However, be careful not to submit too many applications at once, as this can hurt your credit score if lenders do a hard pull of your credit report.
Upload any required documents - In many cases, online lenders will ask you to verify certain information, such as your income. You can do this by uploading documents like your pay stubs or W2s.
Sign the loan agreement - When you're ready to accept a loan offer, the lender will send you the final loan agreement. In some cases, you can sign electronically and submit your signed agreement over the internet.
Get your loan funds - The majority of online lenders will deposit your money directly into your bank account, and many lenders can do this within one to two business days.
Alternatives to bad credit personal loans
While a bad credit personal loan can get you much-needed cash in a financial pinch, there are several alternatives worth exploring. If you're unable to qualify for a bad credit personal loan or you just want to see what else is out there, here are some other types of funding to consider.
Home equity loan - If your credit score is holding you back, you might have a better shot of approval if you apply for a secured loan, such as a home equity loan. These loans are secured by your home, so lenders take on less of a risk and may be more willing to work with you as a result.
Borrow from your retirement plan - Some employers allow employees to take out loans from their retirement plan. While you have to pay interest, you are essentially borrowing from yourself and paying yourself back.
Credit card - A credit card gives you access to a set credit limit, which can be a good fit as long as you're certain you can afford the payments. Look for a card with affordable terms, including a reasonable interest rate and no annual fee.
Peer to peer loans - Peer to peer loans are funded by investors rather than banks, and they are often more flexible about working with people with bad credit scores. For example, the peer to peer lending site LendingClub lets borrowers request up to $40,000 in alternative financing.
Borrow from a friend or relative - If you've struck out with banks and online lenders, you can try asking a friend or family member to loan you money. If you go this route, it's best to put everything in writing so you avoid any misunderstandings down the road.
Having bad credit can make it tougher to qualify for a personal loan when you need to borrow $5,000 or more. If you're willing to shop around and compare various lenders, however, you have a decent chance of finding an offer that suits your financial needs and goals.
About the Author
Mike is a recognized credit expert and founder of Credit Takeoff. His credit advice has been featured in CNBC, Investopedia, CreditCards.com, Bankrate, Huffpost, The Simple Dollar, Reader's Digest, LendingTree, and Quickbooks. Read more.