Personal loans for people with bad credit can be less risky and less expensive than payday loans. Personal loans can be used to cover a variety of personal expenses. For example, they can be used to manage your travel expenses or car repairs, as well as the costs of a medical issue, home improvement, debt consolidation, and other needs. These loans are available from banks, credit unions, and online lenders, and can be secured, which means you need collateral to borrow money, or unsecured, which means there is no collateral required.
You Can Apply for Online Personal Loans with Just Four Easy Steps
- Fill out the online request form with your personal, professional, and financial information.
- Select your loan amount and repayment term.
- Wait for the lenders to review your claim and make a decision.
- Your loan will be directly deposited into your check account within 24 hours of approval.
Note that if you choose to pay off the loan before the end of the term, the lender may charge foreclosure fees as a penalty. This penalty is typically 1% to 2% of the whole amount owed.
Benefits of Online Personal Loans for Bad Credit
- Unlike other types of loans, such as a home loan or a car loan, which require multiple documents, online personal loans do not require any, and the approval process is quick.
- Borrowers do not need to have good credit history and scores to qualify for bad credit personal loans. Today the internet is filled with numerous online lending platforms that provide personal loans for bad credit.
- With a variety of financial institutions offering personal loan online services, the loan amount is transferred within a few hours if the lender is confident in your repayment capacity.
- Lenders give you the option of choosing the length of your loan. Personal loans typically have terms ranging from 12 to 60 months. As a result, you can choose the loan term based on your ability to repay. Choosing a shorter loan term is recommended to save money on interest and repay the loan faster.
Interest Rates for Online Personal Loans
Actual personal loan interest rates and annual percentage rate (APR) will vary depending on your creditworthiness, loan term, loan amount, and lender. In April 2021, for example, the average annual percentage rate on a personal loan ranged from 9.30 percent to 22.16 percent.
In general, the higher your credit score, the lower the rate is. For example, individuals with excellent credit, defined as any FICO credit score between 720 and 850, should expect personal loan interest rates to range between 9% and 13%, with many of these individuals qualifying for lower rates.
Personal loan APRs for individuals with average to poor credit will generally approach the higher end of lenders' advertised APR ranges, which can sometimes approach or exceed 30 percent. If your credit score is less than 580 or you have no credit history, you may have difficulty qualifying for an online personal loan. However, bad credit personal loans are still available on the internet.
Online Personal Loans VS Line of Credit
Personal loans and lines of credit are sometimes combined. A personal loan is not the same as a personal line of credit. The latter is not a one-time payment; it functions similarly to a credit card. A personal loan provides you with a lump sum of money upfront and requires you to make fixed monthly payments for the loan duration. A personal line of credit, on the other hand, allows you to withdraw as much cash as you need at any time and repay it on your own timetable with a variable interest rate.