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Loans with Bad Credit

It can sometimes be difficult to get loans with bad credit. Let’s face it, mainline lenders will outrightly turn down your loan application. You will have to turn to some private lenders who will be willing to give you loans with your bad credit situation.

In a perfect scenario, it’s either you have the cash on hand to pay for all your expenses or you have savings that you can dip into to cater to your needs. But in reality, if this does not happen, you will have to opt for other alternatives to meet your needs especially if you have bad credit.

Loans for people with bad credit are the type of loans that are given to those whose credit score is not too great. The causes of bad credit among individuals varies. Some may include delayed payment in bills, late or no payments on loans taken etc and this can cause your credit score to be affected in the negative.

This results in a situation where you may not be granted the loans that you need because borrowers will consider you as a risk who will not pay back the funds you are given.

Not only that but if the amount involved is huge, the lender can be in danger of the collapse of his company should there be the case of too many loans that will have been taken and not paid back.

Can you apply for loans with bad credit?

The moment you check your credit score and it’s below par your stomach can sink and even your head can spin. It will feel like everything has come to an end. Somehow it’s true because most traditional lenders will not look your way when you apply for loans with bad credit.

But there are some lenders like payday lenders and lenders who give out car title loans that will be available to you when you have bad credit. The fact is that these loans can be very expensive and if the debt is not managed well you may have high interest rates to pay.

A good option when looking for loans with bad credit will be to find a lender who is willing to work with your current credit situation. You can still apply for loans with bad credit from such lenders.

How much does it cost to borrow loans with bad credit?

Having a good credit score has always been advantageous as you get better interest rates and also pay lower fees for the loans that you borrow. Loans with bad credit can cost a lot more than loans for good credit borrowers.

For example, if with a good credit score you get a personal loan of $2,500 to cover your car breakdown cost. The lender then agrees to give you an interest rate of say 9.33% with monthly payments of $79.88 over a 3-year period. You will pay an interest of $375.68 over the life of the loan.

Imagine if you are on the bad credit side of things, the lender can give the same 3-year loan at a rate of 35.89%.

Your monthly payment will be $114.35 spread over the 3 years will be $1,616.70. This gives an amount of $1,240.92 as the difference between the interest the person with good credit is paying as compared to what the one with bad credit will be paying for the same 3-year loan. It can be expensive to have loans with bad credit.

Loans that you can get with bad credit.

Payday loans

In order to get a payday loan with bad credit, you would have to first consider your eligibility to the loan you are applying for. The eligibility terms may vary from lender to lender but some of the requirements include; proof that you are over 18yrs and a citizen of the country in which you are applying.

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Contact information, Social Security number, proof of employment, whether you receive a monthly payment or you receive a bi-weekly payment are also some of the documents and details that are requested for. After the evidence that you have a source of income and can easily pay back the loan given, you can have access to the loan you need.

You can either decide to go to the payday loan office or find a lender online. Should in case you decide to visit the office, you should consider reading through the application form carefully before signing on to anything.

Ask questions to get the clarification you need so that you do not feel short-changed. You should also find out the exact fees that you will be charged for their services. This similarly applies to when applying online. Its advisable to check for all the necessary information to your satisfaction before accepting their terms and conditions.

Loans with bad credit that are available in the form of payday loans also consider the individuals’ income levels to the loan that is being given. Those who earn more will get higher amounts than those who earn less considering the fact that the payback period is very short.

If you are not able to pay for the first loan, you may be tempted to take out another loan to help you pay and no borrower would want such a situation. Lenders will also be wary of giving you loans since you are likely to default.

Car Title Loans

Car title loans allow people to get short-term access to finance by putting their vehicle in as collateral. The vehicle title is given to the lender until the loan is repaid. You can still use your car whilst paying your loan.

How much you can borrow depends on the value of your car. Lenders normally give 25% – 50% of the value of the car as a loan. You will not be able to take out all the value of your car in the title loan because lenders look at the possibility of you being unable to pay back what you borrow.

They will, therefore, give you an amount that you can easily pay back so that they do not repossess and sell off the vehicle. Sometimes the downside to this arrangement is that if you are not able to pay back the loan, you will risk losing your car.

Installment loans

You can opt for installment loans when you are looking for loans but do not have good credit. To apply for installment loans is now easier especially with those looking for loans with bad credit. Lenders are willing to give to those who can prove to them that they will be able to pay back the loans they give.

You then get the amount of money you need in one fixed amount and then pay later in bits. Installment loans are for borrowers with bad credit because they do not come with overly stringent laws from either lenders or the state. The terms of payment are also flexible to enable you to pay for the loans taken.

Where to find loans with bad credit

There are different places that you can get loans even with bad credit but this will involve some shopping around for the ones you can afford.

The banks may not give to you unless you have cleaned up your credit report and your score as well. The sources below are helpful alternatives to getting loans with bad credit.

1. Credit Unions

Community-based credit unions are helpful in giving out loans to people with bad credit. They were established long ago among communities to help themselves out of financial distresses.

To get loans from credit unions, especially loans with bad credit, the main considerations are your character and the promise you give to repay.

Their interest rates are relatively lower that than of the banks and it applies to everyone no matter the credit score you may have. You end up saving more on the interest than going to apply for a loan from the bank.

Most credit unions are actively looking for people to borrow from them. They are one of the go-to people who will give you loans with bad credit situations.

Whether you are part of the armed forces, or a government worker, or a teacher, you can join a credit union near you to get favorable terms regardless of your credit score.

2. Borrowing from family friends

This can prove to be one of the most challenging avenues of borrowing because it can affect your relationships. But if you are cash strapped and loan-anxious you should go ahead with it cautiously ensuring that you keep to your word.

It is very easy to be approved for loans with family and friends if you have bad credit because they already know you and can trust you. It gives you a break from all the stressful terms and conditions from traditional lenders. Interest rates on such loans are also very low as compared to other bad credit lenders.

Despite the rosiness of this arrangement, there may be underlying currents should you default on the loan. You should, therefore, ensure that you repay the loan so that your relationships will not be poisoned or damaged more than even your credit score.

Loans from any family member or friend should be treated with the utmost urgency and respect for any agreement that was made. Having documentation of loans taken from them will ensure that future problems are avoided.

3. Co-signing to get loans with bad credit

You can have access to loans with bad credit by co-signing. This is usually a situation where your credit is not good enough for you to get a loan on your own. You will then ride on the co-signers good credit to get the loan that you need.

The terms and conditions of the loans are set based on the co-signers score. Repayment is also the responsibility of the co-signer. This is not an escape plan for the borrower though because if there is a default or there are late payments, both of you will have that reflecting on your credit report.

The more you are able to make timely payments however it will affect your score positively and you can now get loans without someone co-signing.

4. Tap into your Home Equity

If you have equity on your home, you can use that as collateral for getting the loans that you need even with bad credit. Home equity loans are loans that are gotten after the value of your property is determined by an appraiser from a lending institution.

loans with bad credit

A home equity loan is a one-time lump sum with a fixed rate of repayment. The interest rate is usually low because your home is the collateral for the loan. You can get loans with bad credit from home equity loans no matter your credit score.

A home equity line of credit also known as HELOC is another type of equity on your home that can be used to get the loan that you need. Heloc’s give borrowers the option to borrow and repay a number of times until the contract expires.

The borrower chooses when and how often they can borrow based on the equity of their property. Heloc’s are available for up to 30 years with variable interest. It has minimum monthly payments that can be very low as paying only the interest that is due. The interest rate is determined by a prime rate ( the lowest rate that money can be borrowed commercially) and a margin determined by the lending institution.

However, it’s important to note that home equity endangers your property when you cannot repay the debt. But if you are able to pay back, it’s a good option for loans with bad credit.

5. Peer-to-peer lenders

Peer-to-peer lending sites can also be a good source of getting loans with bad credit history. What takes place on these sites is that you can get loans from individuals. You post a loan on the site stating the amount you need.

The investors will then assess your loan request and then choose whether they will fund you or not. The truth is, credit score is still a factor but it still makes room for those with bad credit to apply.

You can post your loan on different websites and wait for a response. Their interest rates are lower and the agreements are more lenient than with traditional lending institutions.

6. Online personal loans

Online personal loan lenders specialize in giving loans especially to those with bad credit. Technology and a large number of people being turned away because they do not qualify for loans from mainline lenders have created this niche market.

Those who need loans with bad credit can opt for online personal loans. The lenders do not have offices and everything is done online.

The loan can be taken for whatever need that the borrower may have. Funds can be gotten with a few hours or days and no fees are charged when applying nor do they have penalties for when you pay your debt before the time.

Applying for online personal loans is also a simple and easy task. The decision to give the loan to the borrower is not solely based on your credit score but other factors are also included like your education and employment history.

Some online personal lenders have their own models they use in calculating the credit score other than the usual FICO score. This makes more people who want loans with bad credit qualify for their loans.

Secured Vs Unsecured loans with bad credit

Should in the event that you have a less impressive credit score that will not allow you to get a loan, you can consider secured loans. Secured loans are gotten by placing an asset of yours before the loans are granted.

You can use your home, car, property, boat, jewelry etc as a security for the loan you need. Certain banks even go in for the savings or the value of the stock you own as collateral for the loan. When you are able to pay off the loan, there will be no need to liquidate your assets.

If you are not able to pay back the loan, the lender will use the asset to offset it. Secured loans give you access to better terms and also larger sums of money than people looking for unsecured loans with bad credit.

Unsecured loans for those with bad credit only has a promise to repay. This can prove difficult to get from banks and other lenders may find it risky. In some cases, you should have a good relationship with your bankers in order to get unsecured loans with bad credit.

With this, they can vouch for you that you will repay the loan but at a higher interest rate than those with good credit.

When it comes to getting unsecured loans with bad credit from the banks, without strong relationships with them, you may not get the loan that you need because all the risk is borne by the lender. Due to this, they charge high interest rates. The high interest rates make up for this risk involved in giving loans to those with bad credit.

Those who want loans with bad credit should look for a lender who…

Those with bad credit who need loans must look out for lenders who are concerned about certain factors and not only giving out the loan. Below are some of the considerations that those who need loans with bad credit should look out for.

• Look for a lender who offers installment loans instead of payday loans

Payday loans are not the best way to start off with your finances if you have bad credit. Most payday loans are renewed if you are not able to pay your first loan off. You can instead get personal installment loans that you have a more flexible term of paying back and at lower rates also. Installment loans are a better option to get loans with bad credit.

• A lender who considers your ability to repay

Legitimate lenders will always be interested in your ability to repay the loans that you get from them. Lenders who show no efforts in your ability to repay are likely to be predatory.

Responsible lenders will clearly draw out terms with you and make checks on your income to decide how much you can borrow. Such assessments ensure that you do not borrow beyond what you can handle.

• A lender who performs a soft credit check

Soft credit checks are checks that are run on your credit report but does not negatively affect your credit score. You can conduct the soft credit inquiry yourself or a lender, employer or landlord can initiate it.

Lenders who conduct hard credit checks will harm your credit score. Hard credit checks remain on your report up to two years. A good lender will ensure that soft credit checks are done and if you meet those who do not perform any credit check at all, your red flags should go up.

• A lender who offers flexible terms and repayment

One of the main headaches that come with going in for loans is the repayment terms. Many borrowers are looking for a flexible repayment option so that they do not default on the loans taken.

Some lenders offer repayment terms of 30 days depending on the type of loan you take. Its advisable to go in for personal installment loans that will offer good terms of repayment schedules with lower monthly payments which you can afford. Any lender who offers astronomical fees with short repayment terms must be avoided.

• A lender who reports your payments to credit bureaus

Borrowers looking for loans with bad credit know that their credit rating is already not in good shape. Hence it is of most importance to them to find lenders that will report their on-time payments to the credit bureaus to increase their credit score. You should check with the lender if they will report your payments to the credit bureaus.


In conclusion, it is best to save up for your emergencies or huge purchases that you have to make. This prevents you from taking on debts in emergencies and going in for financial help in panic but rather focus on the improvement of your credit.

If you have spent most of your time looking for loans with bad credit, it is heart-warming to know that its not a permanent situation. Even if you file for bankruptcy, you can have your credit report cleared after some years.

There is a possibility for anyone with bad credit to work towards it. Should in case you also find errors on your credit report you can also make efforts to correct the errors so it does not affect your credit negatively.

Disclaimer: All loans offered through this website are subject to credit and underwriting approval. is a lead referral company, not a lender. AfterLoans only works with financial service providers that adhere to Canadian laws and regulations. You can borrow up to $20000. Loans amortization is between 6-36 months. APRs range from 19.99% to 55%. The actual APR charged will depend on the lender’s assessment of your credit profile. For example, on a $1000 loan borrowed for 12 months at 29.9%, the monthly payment will be $97.24; with a total repayment, including interest, of $1166.88 There is also lender’s optional loan protection policy. In the event of a missed payment an insufficient funds fee of around 45$ may be charged (dependent on the lender). If you default on your loan payment plan the lender may terminate the plan and the remaining balance will become payable immediately. Our lenders employ fair debt collection practices, but will pursue the payment of Outstanding debts to the full extent that Canadian law allows.