If you have less-than-perfect credit, finding an affordable personal loan might seem like a challenge. However, there are lenders out there who specialize in providing personal loans for individuals with bad credit. In this article, we will explore the options available to you and help you find the best personal loan for your needs. Whether you’re looking to consolidate debt, cover unexpected expenses, or build credit, Credit Karma Loans can help you navigate the world of bad credit loans.

Understanding Personal Loans for Bad Credit

What are Personal Loans for Bad Credit?

A personal loan is a type of loan that can be used for various purposes, such as debt consolidation, home improvement, or emergency expenses. When you have bad credit, lenders may view you as a higher-risk borrower, which can result in higher interest rates and stricter terms. However, there are lenders who specialize in offering personal loans to individuals with bad credit, providing you with the opportunity to access the funds you need.

Factors to Consider When Comparing Loan Terms

When comparing personal loan options, it’s important to consider several factors to ensure you find the best deal. These factors include:

  • Annual Percentage Rate (APR): The APR represents the total cost of borrowing, including interest and fees. With bad credit, you can expect a higher APR, so it’s crucial to compare rates from different lenders to find the most affordable option.
  • Loan Repayment Terms: The loan repayment period refers to the time frame in which you’ll have to repay the loan. Longer repayment periods may result in more interest paid over time, so it’s essential to find a balance that works for your financial situation.
  • Monthly Payments: Your monthly payments will depend on the loan amount, interest rate, and repayment term. Ensure that the monthly payments fit comfortably within your budget to avoid financial strain.
  • Loan Minimum and Maximum: Lenders typically have minimum and maximum loan amounts. Ensure the lender you choose offers the loan amount you need without requiring you to borrow more than necessary.
  • Loan Fees: Check for any origination fees, prepayment penalties, or late payment fees associated with the loan. These fees can impact the overall cost of borrowing and should be considered when comparing options.

The Best Personal Loans for Bad Credit

Now that we understand the factors to consider when comparing personal loans for bad credit, let’s explore some of the top options available through Credit Karma Loans.

  1. OneMain Financial: Best for Auto-Secured Loans

OneMain Financial offers auto-secured loans, which typically come with lower interest rates compared to unsecured loans. While these loans can provide lower rates, they do have additional costs, including origination, late fees, and insufficient funds fees. It’s important to consider these fees when calculating the total cost of borrowing. Loan amounts with OneMain Financial range from $1,500 to $20,000, with repayment terms of two to five years[^1^].

  1. Mariner Finance: Best for Co-Signers

Mariner Finance allows you to apply for a personal loan with a co-signer, which can improve your chances of qualifying or securing a lower interest rate. The company also considers applicants who have filed for bankruptcy, subject to underwriting requirements. Loan amounts range from $1,000 to $25,000[^2^].

  1. OppLoans: Best Payday Loan Alternative

Payday loans often come with high interest rates and short repayment timelines, making them a less desirable option. OppLoans provides an alternative by reporting your payments to credit bureaus, helping you build credit history. The repayment terms range from nine to 18 months, and interest rates are lower compared to traditional payday lenders. Loan amounts offered by OppLoans range from $500 to $4,000[^3^].

  1. MoneyLion: Best for Building Credit

MoneyLion offers credit-builder loans of up to $1,000, which can help establish a positive payment history. Loan payments are reported to the three major credit bureaus, helping you improve your credit score over time. A monthly subscription fee of $19.99 is required to access a credit-builder loan, but you can earn rewards to offset the fee. With MoneyLion, you receive a portion of your loan proceeds upfront, with the rest placed in a credit reserve account[^4^].

  1. Possible Finance: Best for Quick Loans

Possible Finance offers the option to borrow up to $500 instantly and repay the loan in four installments. The lender disburses funds within minutes (though it may take up to five days). Possible Finance is not available in all states, so it’s important to check availability before applying[^5^].

  1. Earnin: Best for No-Interest Loans

Earnin is an app that provides interest- and fee-free cash advances of up to $750, using your next paycheck as collateral. While Earnin doesn’t affect your credit, it requires a steady paycheck, direct deposit, and a fixed work location. The loan amount is automatically deducted from your checking account on your next payday[^6^].

  1. Afterpay: Best for Short-Term Loans

Afterpay is a buy-now, pay-later app that allows you to make purchases and split the payments into four interest-free installments over six weeks. Afterpay conducts a soft credit check and doesn’t charge interest if payments are made on time. Late payments may incur a fee of up to 25% of the order value[^7^].

  1. NetCredit: Best for Financial Resources

NetCredit provides a variety of resources to help you take control of your personal finances. Their loans range from $1,000 to $10,000, with repayment terms of six to 60 months. While there are late fees and potential origination fees, NetCredit offers valuable financial tools and educational materials[^8^].

Should You Take Out a Personal Loan with Bad Credit?

Taking out a personal loan with bad credit can be a strategic financial move in certain situations. Here are a few scenarios where it may make sense:

  1. Consolidating High-Interest Debt

If you have high-interest credit card debt, a personal loan can help you consolidate your debt into a single payment with a potentially lower interest rate. This can save you money in the long run and simplify your repayment process.

  1. Covering Unforeseen Expenses

When faced with unexpected expenses, a personal loan can provide a more affordable alternative to credit cards or payday loans. Personal loans typically have lower interest rates and longer repayment periods, allowing for more manageable monthly payments.

While personal loans can be beneficial in these situations, it’s essential to consider the cost of borrowing and ensure it aligns with your long-term financial goals.

Exploring Payday Loans and Alternatives

Payday loans are short-term loans with high fees and often trap borrowers in a cycle of debt. Consider these alternatives before turning to a payday loan:

  1. Borrowing from a Credit Union: Credit unions often offer more favorable loan terms and interest rates compared to payday lenders. Explore the personal loan options available through credit unions in your area.
  2. Overdraft Protection: Instead of a payday loan, consider signing up for overdraft protection on your bank account. This can help you cover unexpected expenses without resorting to high-interest loans.
  3. Credit Counseling Services: Working with a consumer credit counseling service can help you develop a repayment plan for your debts. These services can negotiate with creditors on your behalf and provide financial guidance.

What to Do If You’re Denied a Personal Loan

If you’re denied a personal loan due to bad credit, there are steps you can take to improve your chances of approval in the future:

  1. Look for Alternative Lenders: If you’ve been denied by a traditional bank, consider online lenders or credit unions that specialize in bad credit loans.
  2. Build Your Credit: Establishing a positive payment history and paying down existing debts can improve your credit score over time. Check your credit reports for errors and take steps to address any issues.

By taking proactive steps to improve your credit, you can increase your chances of qualifying for a personal loan in the future.


Finding the best personal loan for bad credit may require some research and comparison, but it’s possible to access the funds you need. By considering the factors discussed in this article and exploring the options available through Credit Karma Loans, you can make an informed decision and secure a loan that aligns with your financial goals. Remember to borrow responsibly and prioritize loan terms that are affordable for your budget.

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