Best installment loans for bad credit of July 2024
“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
BLUEPRINT
Updated 5:15 a.m. UTC July 1, 2024
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An installment loan is a lump sum of cash that you repay in equal installments for a set period of time. If you have bad credit, it can be tough to qualify for this type of loan — but not impossible. Several lenders offer installment loans to borrowers with poor or no credit.
In 2024, the best installment loans for bad credit offer more lenient credit score requirements, a variety of loan amounts and relatively long repayment terms. Some also permit borrowers to apply with a co-signer or co-borrower, making it easier to qualify. However, bad credit loans typically come with higher interest rates compared to good credit loans.
Best installment loans for bad credit
- Upgrade: Best overall.
- LendingPoint: Best for quick approval decisions.
- Prosper: Best for peer-to-peer lending.
- LendingClub: Best for co-borrowers.
- Oportun: Best for small loans.
- Avant: Best for customer support.
- Upstart: Best for thin credit.
Why trust our personal loan experts
Our team of experts evaluated hundreds of personal loan products and analyzed thousands of data points to help you find the best fit for your situation. We use a data-driven methodology to determine each rating. Advertisers do not influence our editorial content. You can read more about our methodology below.
- 22 personal loan lenders reviewed.
- 308 data points analyzed.
- 6-stage fact-checking process.
Compare the best installment loans for bad credit
| INTEREST RATES | LOAN AMOUNTS | REPAYMENT TERMS | MIN. CREDIT SCORE | CAN APPLY WITH A CO-SIGNER OR CO-BORROWER? | |
|---|---|---|---|---|---|
Upgrade
| 8.49% to 35.99%
| $1,000 to $50,000
| 2 to 7 years
| No minimum
| Yes
|
LendingPoint
| 7.99% to 35.99%
| $2,000 to $36,500
| 2 to 6 years
| 600
| No
|
Prosper
| 8.99% to 35.99%
| $2,000 to $50,000
| 2 to 5 years
| 560
| Yes
|
LendingClub
| 8.98% to 35.99%
| $1,000 to $40,000
| 2 to 5 years
| No minimum
| Yes
|
Oportun
| 34.95% to 35.99%
| $300 to $18,500 (depending on your state and loan type)
| 1 to 5.33 years
| No minimum
| Yes
(in some cases)
|
Avant
| 9.95% to 35.99%
| $2,000 to $35,000
| 1 to 5 years
| 580
| No
|
Upstart
| 7.8% to 35.99%
| $1,000 to $50,000
| 3 or 5 years
| 300
| No
|
All rates include discounts as applicable where noted by the lender and are accurate as of June 11, 2024.
Methodology
Our expert writers and editors have reviewed and researched multiple lenders to help you find the best installment loan for bad credit. Out of all the lenders considered, the seven that made our list excelled in areas across the following categories (with weightings): loan details (15%), loan cost (25%), eligibility and accessibility (35%), customer service (15%) and ease of application (10%).
Within each major category, we considered several characteristics, including APR ranges, loan amounts, maximum terms, minimum credit score requirements, co-signer acceptance and funding time. We also evaluated each provider’s late fees, state availability, customer support options and customer reviews.
Why some lenders didn’t make the cut
Of the personal loan lenders that we reviewed, only a fraction made the cut. The reasons for this varied by lender, with the majority not receiving high enough scores to be included due to having stricter credit score requirements. Others also scored lower due to having limited customer service hours or poor customer reviews.
What is an installment loan?
Unlike a revolving credit line like a credit card, an installment loan is a type of loan that provides a lump sum of cash. This is then repaid in monthly installments for a set period of time, and these payments each cover a portion of the principal balance and interest that you owe.
While most installment loans come with fixed interest rates and set payments throughout the life of the loan, others — such as adjustable-rate mortgages — have variable rates that can fluctuate over time depending on market conditions. In addition to interest, lenders might also charge other fees with installment loans, such as origination fees or late fees.
How installment loans work and when to use them
Various types of installment loans can be used for almost anything. For example, you could take out a personal loan to cover a major expense, a mortgage to pay for a house, an auto loan to buy a car or a student loan to account for college costs.
Keep in mind that depending on the type of installment loan you get, you might have to provide collateral to secure the loan. For instance, while most personal loans are unsecured, a mortgage is secured by a home while a car loan is secured by a vehicle. It can be easier to qualify for a secured installment loan because there’s less risk to the lender — but you could also lose your property if you don’t make your payments.
Types of installment loans
There are many types of installment loans to help you cover different kinds of expenses. Here are some of the most common sorts of installment loans:
- Personal loans: These loans can cover almost any personal expense and typically range from a few hundred dollars up to $100,000, depending on the lender. Most personal loans don’t require collateral.
- Mortgages: These are used to pay for the purchase of a home and can come with fixed or adjustable rates. The home acts as security for the loan.
- Student loans: These can help you pay for a college education and the expenses associated with it, such as housing and textbooks. While federal student loans all come with fixed rates, private student loans can have fixed or variable rates.
- Auto loans: You can use an auto loan to pay for a new or used car, which will secure the loan as collateral.
Installment loan pros and cons
Pros
- Can cover almost any type of expense.
- Most come with fixed rates and set payments.
- Typically have lower rates compared to revolving credit lines.
Cons
- Can only borrow a single, lump sum, which can lead to overborrowing.
- Might come with fees.
- Could lose your collateral and damage your credit if you don’t keep up with your payments.
How bad credit installment loans affect your credit
Installment loans can affect your credit in a few ways. On the positive side, if you make all of your payments on time or are able to diversify your credit mix, you could see an improvement in your score over time.
On the other hand, it can also hurt your credit. When you apply for any loan, the lender will perform a hard credit check when deciding whether to approve your application. This can cause a slight but temporary drop in your credit score — but usually only about five points or less. Opening a new account can also lower your average credit age — or how long you’ve had credit accounts open. The good news is that the negative effects these have on your credit are usually temporary.
Tips for building your credit
If you have a bad credit score, consider improving it before applying for an installment loan. Here are some proven ways to build your credit:
- Pay on time. Payment history is one of the most important factors in a credit score. To strengthen your credit in the months before applying for a personal loan, focus on paying your credit cards and other bills on time.
- Ask for a credit limit increase. One credit score factor is your credit utilization, or the amount of available credit you’re using. So, if you ask your credit card issuers to increase your credit limit, it automatically lowers your utilization — as long as you don’t charge more on your cards.
- Fix any errors on your credit report. Credit-scoring companies use the information in your credit report to calculate your score, so any incorrect information could hurt your credit. You can request a copy of your reports from AnnualCreditReport.com — then from there, dispute any errors with the credit bureaus.
- Consider becoming an authorized user. You can ask a creditworthy family member or friend to add you on one of their credit cards as an authorized user. Even if you’re not actively using the card yourself, the account will appear on your credit report. For example, if the card keeps a low balance and payments are made on time, this can boost your score. But the reverse is also true: high utilization rates and missed payments can hurt your score.
Frequently asked questions (FAQs)
The credit score you’ll need for an installment loan will depend on the type of loan and the individual lender. For example, while most personal loan lenders require good credit, others accept scores as low as 560, such as Universal Credit and OneMain Financial.
Some lenders — such as Oportun and Upstart — are also willing to work with borrowers who have little to no credit history.
When considering an installment loan, it’s important to consider not only interest rates but also repayment terms, potential fees and eligibility requirements.
“Good installment loans don’t have variable interest rates,” says financial coach Jonathan Thomas. “Your rate should stay the same as long as you have the loan. You also shouldn’t see prepayment fees or application fees [fees charged to borrowers before they have been approved].”
In general, the easiest type of installment loan to get will be a short-term personal loan that doesn’t require a credit check, such as a payday loan, pawn shop loan or car title loan.
However, while these sorts of loans can be appealing, they’re also often predatory in nature, and they can come with astronomically high APRs and fees — possibly as high as 400%, depending on the type of loan. And in the case of pawn shop loans and car title loans, you could lose your property if you don’t keep up with your payments.
Because of these risks, it’s best to treat these alternatives as a last resort and to stick with a traditional personal loan instead whenever possible. Several personal loan lenders accept poor credit scores while some even work with borrowers who have no credit. Also note that legitimate lenders will charge reasonable interest rates and fees, which will be disclosed to you before you ever sign a loan agreement.
Some lenders might not have a minimum score to qualify, so you may be able to get a personal loan if your score is low or you don’t have much of a credit history at all. LendingClub and Oportun , for example, don’t have a minimum score requirement.
Just keep in mind, the lower your credit score, the higher your interest rates can be. So, even though you might be able to get an installment loan with bad credit, you’ll likely pay higher rates than you would with a good score.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
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