Can I Get a Loan with Bad Credit in 2023?
Borrowing a small loan may be the perfect solution to cover unexpected expenses or emergencies. Whether you need cash to fix a broken pipe, replace a car headlight, or settle an overdue debt, a short-term loan offers you a quick solution.
While most loans are declined due to poor credit, it’s still possible to get a small-dollar loan even with bad credit. This may keep you from getting a great APR, but you’ll still get quick cash to sort that financial crisis.
Some of the best loans that you can qualify for (even with bad credit) include:
One of the easiest loans to get with bad credit is a same-day deposit payday loan. These are short-term, small-dollar loans intended to help one cover unexpected expenses.
Most states have put a cap on the maximum amount of a payday loan you can get at any particular time. Most range between $300 and $1000. Payday loans are usually paid back with your next paycheck.
Most payday lenders do not check your credit history to approve your loan, so this is an ideal loan if you have no credit history or your credit score falls under 640.
An online application process for a payday loan is also very quick and convenient. All you need is to have documented identification, proof of income, and a checking account. You will then need to fill out and submit an online application form, and your lender will approve the loan within minutes or on the same day. The approval may also take one business day to process if you applied a bit late or if your documents needed further clarification.
Payday loans’ biggest disadvantage is that they are quite expensive since the costs of acquiring them are very high. However, to protect you from predatory lending, most states have put in place laws and regulations and caps on the costs of a loan. Also, to get approved for a payday loan, you must provide proof of income in most cases, no less than $800 per month.
Another excellent option of a loan you can get with bad credit is a title loan. This is a type of secured loan where the borrower surrenders the hard copy of their car title to the lender as collateral.
With title loans, you give your car title in exchange for the loan. While a title loan can go as high as $50,000 depending on the car value, you can lose your car if you fail to honor your commitment to repaying the loan and accumulated interest. Just like a payday loan, this type of loan has very steep fees.
When the borrower repays the title loan in full, plus interest, the lender removes the lien and gives back the car title to the borrower. The lender has a right to sell your car to reclaim their cash plus interest.
Pawn Shop Loans
Pawn shops also offer collateral-based types of loans. With this type of loan, you bring an item of a certain value to the shop and exchange it for cash equal to that item’s value.
To get your item back, you have to repay the loan on time. The terms of the loan vary state-to-state. This type of loan is also very expensive, and you may end up paying the shop twice or even more for the amount due on the loan.
The pawn shops can also keep your item and sell it if you fail to honor your word. After the sale of the item, you basically get nothing, so this is a risky type of loan to take and should only be a last resort.
Payday Alternative Loans
Payday alternative loans (PALs) are a type of small loan given to some federal credit unions members. The loan has better terms than payday loans as the cost is lower and the repayment period is longer. The payday alternative loans have interest rates that don’t exceed 28% and a loan term of 1 to 12 months. The amounts you can get range between $200 and $2000.
Personal Loans from Online Lenders
Small personal loans from online lenders are an excellent option for those with bad credit. These types of loans are installment loans giving a fixed amount of money, and the pay-off should take place over a predetermined number of payments.
You can either pick a secured or unsecured personal loan. For secured ones, you have to surrender an item like a car or a house as protection against default. Unsecured ones don’t require any form of collateral.
Some lenders of personal loans include peer-to-peer lenders who are individual investors willing to offer you a better deal than traditional financial institutions, meaning they offer better rates to people with better credit ratings.
Alternatives to Small Loans for Bad Credit
Sometimes, you may fail to qualify for the above-mentioned loans because of one reason or another. There’s no need to panic as there are other alternatives to bridge your cash needs. These include:
If you’re employed, you can inquire with your employer about giving you a short-term advance from your paycheck. In most cases, the employer will be willing to offer you the no-interest loan, though it depends on your relationship with your employer.
Another small cash advance can come from your credit card where you can withdraw some available credit as cash. Many credit cards offer their customers this option, but the interest rates are pretty high.
Home Equity Line of Credit
Taking out a home equity line of credit (HELOC) is another great option. This lets you tap into the equity you’ve put together in your home.
The HELOC draw period acts like an open line of credit where you’re provided a set line amount to sort short-term purchases or expenses. You can borrow and get up to the limit and repay, borrow again, then pay back and continue the process until the draw period ends. After the draw period, you should pay off the outstanding balance over a reasonable period of time or all at once depending upon the terms of your HELOC.
Friends and Family
When all else fails, consider asking for a little financial help from friends and family. Write your terms down, including the monthly payment amount, interest charges (if applicable), and due dates. This will help mitigate disputes that may arise later that could hurt your relationship with the people close to you.
Can I get a loan with bad credit? Absolutely, yes! The good thing is you don’t have to go searching for a small bad credit loan lender on your own that’s because we have already done that for you. At AdvanceSOS, we connect you with legit lenders in the U.S. that will give you most of these bad credit loans in the comfort of your home or while on the go.
If you want to borrow cash today, all you need is to have all the documentation required. Once you’re ready, submit a form on our website and wait for one of the lenders to approve your loan.
However, getting a short-term loan when an emergency arises is a bit expensive, so it’s always good to have an emergency fund to cushion you in the future instead of turning to money lenders. Applying for a loan should come only after you’ve exhausted your savings.
Amanda is a senior financial copywriter at AdvanceSOS. Amanda has been writing about finance since 2015. She graduated with a Master’s in finance from the University of Oklahoma. As a result, she has a wealth of experience and knowledge to share with her readers.