Best Installment Loans for Bad Credit in December 2024

Even with no or bad credit, you might qualify for an installment loan from these lenders

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Written by
Carol Pope
Updated November 27, 2024
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Bad credit installment loan lenders at a glance

Upstart: Best for no or thin credit

7.40% - 35.99%

36 or 60 months

$1,000 - $50,000

300

0.00% - 12.00%

Pros
  • Don’t always need credit to qualify
  • Accepts credit scores as low as 300
  • 15-day grace period for late payments
Cons
  • May pay a hefty upfront fee (origination fee)
  • Only two term lengths to choose from
  • No joint loans

What to know

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Upstart, an online lending platform, uses AI to help determine how likely a borrower is to repay their loan. It considers more than your credit score and claims that it has a 44% higher loan approval rating than traditional lenders.

As a result, you might qualify for an Upstart loan with a credit score as low as 300. It may even approve you if you don’t have credit. You’ll have to qualify on your own merit, though. Upstart does not allow joint loans.

Read our full Upstart personal loan review.

How to qualify

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Upstart is transparent. To get a bad credit installment loan, you must have:

  • A job, a job offer that starts within six months or a verifiable source of income
  • A debt-to-income ratio less than 50% (45% in CT, MD, NY and VT)
  • No bankruptcies in the last year
  • No current delinquencies
  • Fewer than six credit inquiries in the last six months (not including mortgages, auto loans and student loans)

You must also have a credit score of at least 300. It might approve you if you have no credit, but you need to be attending (or have graduated from) an accredited school. In the case of no credit, you have to be working toward an associate’s degree (or have one already).

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Prosper: Best for joint loans

8.99% - 35.99%

24 to 60 months

$2,000 - $50,000

560

1.00% - 9.99%

Pros
  • Can change payment due date once a year
  • Free monthly FICO scores
  • Has a mobile app with high ratings
Cons
  • Every loan has an origination fee
  • If investors don’t fund your loan, your listing will expire
  • Customer service department is not open on weekends

What to know

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Prosper is a peer-to-peer lender. This means that after Prosper approves you, investors fund your loan instead of a bank or credit union.

Prosper has a low credit score requirement, and it encourages you to apply with a co-borrower. Adding a second person to your loan could help your approval odds, or get you a lower rate.

But peer-to-peer loans have their downside. If Prosper approves you, you’ll only get your money if investors fund at least 70% of your loan request within 14 days. Otherwise, your loan listing will expire.

Read our full Prosper personal loan review.

How to qualify

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Prosper doesn’t give many specifics about its eligibility requirements. To apply for an installment loan, you must:

  • Have a 560 credit score
  • Be at least 18
  • Have a personal bank account
  • Have a Social Security number

Also, Prosper doesn’t offer loans to those in Iowa or West Virginia.

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Universal Credit: Best for building or improving credit

11.69% - 35.99% (with discounts)

36 or 60 months

$1,000 - $50,000

560

5.25% - 9.99%

Pros
  • Comes with free credit monitoring
  • Can compare multiple loan offers at one time
  • Accepts fair to poor credit
Cons
  • Mandatory origination fee
  • Other lenders have shorter or longer terms
  • No live chat for customer service

What to know

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Credit monitoring can help you keep tabs on your financial health. Watching your score increase as you make on-time loan payments can also be a powerful motivator to continue working on your credit.

Universal Credit (a lending platform) specializes in bad credit and offers free credit monitoring with its loans. You can prequalify, so you won’t get a ding for checking rates. However, every loan from Universal Credit has an origination fee.

Read our full Universal Credit personal loan review.

How to qualify

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Other than a credit score of at least 560, Universal Credit requires you to:

  • Be at least 18 years old, or 19 in Alabama
  • Be a U.S. citizen, permanent resident or live in the U.S. with a valid visa
  • Have a valid email address and verifiable bank account
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Upgrade: Best for interest rate discounts

9.99% - 35.99% (with discounts)

24 to 84 months

$1,000 - $50,000

580

1.85% - 9.99%

Pros
  • Can put up collateral to increase approval odds
  • Might get funds within one business day
  • Rate discount for automatic payments
Cons
  • Must use your loan for debt consolidation to get the lowest interest rate
  • Will pay an origination fee
  • Technically need fair credit if going by FICO scores

What to know

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Upgrade is a lending platform. After you apply, you could have several loan offers from lenders for bad credit installment loans. Once you accept a loan, you could have your money the next day.

Since it requires a credit score of at least 580, you technically need fair credit to qualify for Upgrade. But you can offer collateral, which might help Upgrade feel more confident about approving you.

Read our full Upgrade personal loan review.

How to qualify

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Outside of its credit score requirements, Upgrade requires its applicants to:

  • Be at least 18 (19 in Alabama)
  • Be a U.S. citizen, permanent resident or living in the U.S. with a valid visa
  • Have a verifiable email address and bank account
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OneMain Financial: Best for quick loans

18.00% - 35.99%

24 to 60 months

$1,500 - $20,000

Not specified

$25 to $500, or 1.00% - 10.00% or $25 to $100

Pros
  • Could get money the same day you apply
  • Physical offices located across the country
  • Accepts collateral
Cons
  • High rates
  • Mandatory origination fee
  • History of regulatory action

What to know

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From start to finish, you could have a loan from OneMain Financial just a few hours after you prequalify. There is one stipulation — you’ll need to get your funds via debit card for the quickest loan.

In 2023, the Consumer Financial Protection Bureau (CFPB) hit OneMain Financial with $20 million in penalties. As a result, the lender updated its refund and upselling policies. Still, this is something to consider when shopping around.

Read our full OneMain Financial personal loan review.

How to qualify

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OneMain Financial doesn’t specify its minimum credit score requirements. However, this direct lender is known to work with borrowers with checkered credit histories. When you apply, it may ask for the following documents:

  • Government-issued ID
  • Social Security card
  • Proof of residence (such as a utility bill or lease)
  • Proof of income (like a pay stub or tax return)
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How do installment loans for bad credit work?

An installment loan for bad credit is a personal loan available to borrowers with less-than-perfect borrowing histories.

Many lenders only approve borrowers with good credit or better. For reference, a good FICO score starts at 670. However, lenders for bad credit loans cater to those with lower scores (generally 300 to 669).

Personal loans come as a lump sum of cash. Then, you pay back what you borrowed (plus interest and fees) in equal monthly installments. You can use a personal loan for nearly anything, including home improvements, car repairs, credit card refinancing and more.

You should know that even if a lender approves you for a bad credit installment loan, your loan could be pricey. The lower your score, the higher your interest rate, and in some cases, the more fees you’ll pay.

On this page

 Avoiding predatory installment loans

You’ll need to be selective to avoid predatory lending if you have bad credit. As tempting as they may be, pass on payday loans, title loans and pawn shop loans. These have sky-high APRs that can trap you in a cycle of debt.

While it’s not hard to find installment loans online for bad credit, you may run into shady lenders. Most online lenders are reputable, but some aren’t. Generally, an APR above 36% is predatory. Pay attention to rates and don’t be afraid to shop around.

How to compare bad credit installment loans

APR: Your annual percentage rate, or APR, is the total cost of your loan including interest and fees. The higher the APR, the more expensive the loan. When comparing loans, look at the lender’s maximum APR. Minimum APRs go to people with excellent credit, so those won’t apply here.

Fees: Installment loans for bad credit are more likely to carry an origination fee. This is a fee that the lender deducts from your loan proceeds before sending it to you.

Not as common, but some lenders charge prepayment penalties. Your loan will probably come with high rates, so you may want to pay it off early to pay less overall interest. This might not be worth it if your lender charges a fee for doing so.

Loan terms: Your loan term is the length of time you have to pay off your loan. Some lenders may offer to extend your loan term because it typically means a lower monthly payment. But beware — the longer it takes for you to pay your loan, the more overall interest you’ll probably pay.

Loan amounts: Because personal loans come as a lump sum, make sure your loan provides the amount of money you need. Unlike a credit card, you can’t borrow from the same personal loan more than once. Instead, you’ll have to take out another loan.

Funding timeline: Lenders have two funding timelines. One measures how quickly it can review and approve (or deny) your application. The other measures how quickly it can send you your loan after it approves you.

Lender reputation: Researching a lender’s reputation is vital. This is especially true when you need an installment loan for bad credit. Unfortunately, there are plenty of bad actors waiting to take advantage of those in a tough spot.

The Consumer Financial Protection Bureau (CFPB) maintains a database of borrower complaints. Use this as well as LendingTree’s lender reviews before accepting an offer.

How to apply for a bad credit installment loan

Applying for a bad credit installment loan is much like applying for any other type of loan.

 Check your credit and review your budget

Before you borrow, make sure that you can handle another monthly bill. A loan can get you out of a bind, but you’ll end up worse off than when you started if you fall behind on your payments.

Use our personal loan calculator to see how much your loan payments could cost each month.

If you can afford a loan, the next thing you should do is check your credit. This can help you figure out what lenders you might qualify for (and whether their rates are competitive).

Get your credit score for free with LendingTree Spring. We’ll also show you exactly what factors are currently impacting your score.

 Prequalify and compare offers

Next, prequalify for a loan with several lenders. Prequalification lets you check how likely a lender is to approve you. The process only requires a soft credit hit, so it has no impact on your credit.

Use LendingTree’s personal loan marketplace to get a handful of loan offers at once. You can prequalify for up to five lenders in just a few minutes.

Once you have your offers, compare the metrics we discussed above to find the loan that works best for you.

 Apply and accept your loan

Applying for a loan is straightforward. You’ll provide your name and birthday, as well as some financial information. This includes your annual income, and you may need to provide bank statements or other similar documents.

If the lender approves you, you’ll sign a contract called a promissory note (you can usually do this online). Then, the lender will send your loan funds by paper check or direct deposit. If you’re getting a debt consolidation loan, it might offer to send your loan directly to your creditors.

About 30 to 45 days after you get your loan, you’ll start to pay it back in equal monthly installments.

How to improve your approval odds

Some lenders specialize in installment loans for bad credit. Nevertheless, approval is never guaranteed. If you’re struggling to get a loan, the strategies below could boost your personal loan approval odds.

  • Add a co-borrower: In essence, a co-borrower or cosigner is someone you add to your loan to vouch for you. Both you and your co-borrower have equal responsibility (and rights) to the loan. Ideally, the person you add should have better credit than you. That said, your co-borrower’s credit score will be negatively impacted if your payments are late. Stick to your agreement to avoid a ruined relationship.
  • Consider a secured loan: A secured loan is one that requires collateral. In the case of installment loans, collateral is usually your car. Secured loans are risky. If you don’t pay back your loan, the lender can repossess your collateral. On the upside, secured loans are easier to get, since the lender knows it can recoup some of its losses if you stop paying.
  • Review your credit report: Order a free credit report and check for any fishy entries. It might take some effort, but disputing credit report errors could improve your credit score if you can get an error removed.

Alternatives to bad credit installment loans

Installment loans for bad credit aren’t right for everyone. If you don’t qualify — or if a loan won’t meet your needs — you could have other options.

Paycheck advance app

When used responsibly, paycheck advance apps can help bridge the gap between paydays. Instead of charging interest, most of these apps charge fees. Sometimes, these fees are optional. It’s easy to get in a cycle of borrowing, though. Try not to use these apps often.

401(k) loan

You might be able to borrow from your retirement savings if you’re facing a serious financial hardship. Your credit score doesn’t come into play on a 401(k) loan.

At the same time, if you change or lose your job, you may have to pay back your loan in full in a short period of time. Otherwise, you’ll be on the hook for taxes and a 10% penalty (unless you’re 59 ½ or older).

Credit card for bad credit

If you need money on an ongoing basis, a credit card for bad credit might make sense. However, many of these types of cards require a deposit. If you can afford the deposit (and make your payments on time), you might qualify for a traditional credit card in the future.

How we chose the best installment loans for bad credit

We reviewed more than 31 lenders to determine the overall best five bad credit installment loans. To make our list, lenders must offer personal loans that are accessible to borrowers with bad (or fair) credit. Lenders must also have competitive APRs. From there, we prioritize lenders based on the following factors:

  • Accessibility: Lenders are ranked higher if their personal loans are available to more people and require fewer conditions. This may include lower credit requirements, wider geographic availability, faster funding and easier and more transparent prequalification and application processes.
  • Rates and terms: We prioritize lenders with more competitive fixed rates, fewer fees and greater options for repayment terms, loan amounts and APR discounts.
  • Repayment experience: For starters, we consider each lender’s reputation and business practices. We also favor lenders that report to all major credit bureaus, offer reliable customer service and provide any unique perks to customers, like free wealth coaching.

Frequently asked questions

There are a few ways to get a loan when no one will approve you. A history of on-time payments and paying off existing debt can help you get approved. Admittedly, these aren’t overnight fixes.
 
You could also look into no-credit-check loans. With these, the lender relies on the information it finds during a soft credit pull. But know that the easier a loan is to get, the higher its rates. APRs on no-credit-check loans can hit the triple digits.

A hardship loan is a type of loan that you take out in times of financial hardship. These could help with everyday expenses like utilities or for unexpected emergencies, such as car repairs.

Yes. Rates on an installment loan from a reputable lender should be less than 36%. The average APR on payday loans is around 400%.
 
What’s more, you typically only have two weeks (or one pay cycle) to pay off your payday loan. Terms on an installment loan usually range between 12 and 60 months (sometimes longer).

If you have no other choice and are confident that you can pay back what you borrow, you might be a good candidate for a bad credit installment loan. Just compare offers so you don’t get stuck with a higher rate than necessary. Bad credit installment loans can be expensive.