Updated May 19, 2016
When your credit is less than satisfactory, it can be difficult to find a lender willing to give you a personal loan. That doesn’t mean it’s impossible to find one – there are more options available now than ever before to get a personal loan with bad credit. What’s better is you can easily apply online to see the rates for which you qualify.
That’s thanks to lenders such as Springleaf, Avant, and Lending Club. They each have lower credit thresholds and none rely solely on your FICO score when deciding to lend to you, making it easier to qualify.
Even though you might have a poor credit score, your actual credit history may not be that bad. Your credit file could be thin because you didn’t start building any credit until recently, or maybe you’ve only ever had one open line of credit. Whatever the reason, just because your score is low doesn’t mean you’re not creditworthy, and these lenders know that.
Therefore, it’s worth making sure you’re still getting a decent deal on personal loan terms. It can be easy to think that because your score is low, you’ll be approved for a less than ideal interest rate, but you shouldn’t accept the first offer that comes your way.
Let’s take a look at what these three lenders offer so you know what terms are available to you.
Avant Personal Loan
You can borrow anywhere from $1,000 to $35,000 with a personal loan from Avant*. Specific rates and terms vary depending on your state of residence, but in general, terms offered are 2 to 5 years, and APRs range from 9.95% to 39.95%.
An example loan repayment: if you borrow $3,000 with an APR of 36.00% on a 3 year term, you’ll have a monthly payment of $137.41.
Applying with Avant doesn’t affect your credit score – it’s initially just a soft pull. On its FAQ, it states most customers have a FICO score ranging from 600 to 700, though you can still qualify with a score of 580.
Its customer service team is on staff seven days of the week to assist you in case you have any questions. It’s also possible to receive your funds as soon as the next business day.
Avant’s personal loans are currently offered in all states except West Virginia, North Dakota, Iowa, and Maine.
There is no prepayment penalty or origination fee. However, if you’re 10 days past due on a payment, you’ll be charged a $25 late fee. Avant does mention it offers late fee forgiveness, though.
If your payment is returned unpaid, you’ll be responsible for a $15 fee each time your payment fails to go through.
Lending Club Personal Loan
Lending Club* is different than Springleaf and Avant because it’s a peer-to-peer lender. Individual investors can choose to put their money toward your loan – the money isn’t coming from a bank.
As with Avant, you can borrow anywhere from $1,000 to $40,000 with Lending Club. You can borrow for up to 5 years. Its APR ranges from 5.99% to 35.89%.
For example, if you borrow $20,000 on a 5 year term at an APR of 8.91%, your monthly payment will be around $185.24. That’s including an origination fee of 3% (or $600), so the total amount you receive would be $19,400.
There’s no prepayment penalty, but you need to watch out for the origination fees. These range from 1% to 6%, depending on your loan grade. Remember to factor this in when receiving offers, because being charged an origination fee lessens the amount of money you actually receive.
To be eligible for a loan with Lending Club, you must be 18 years or older and have a verifiable bank account. You must be a U.S. citizen, permanent resident, or have a valid long term visa. Your credit score should be at least 600 to qualify.
Lending Club does not offer loans in Iowa and West Virginia.
When determining creditworthiness, it takes the following into consideration:
- Debt-to-income ratio
- Credit score
- Length of credit history
- Number of open accounts
- Usage and payment history
- Other credit inquiries over the past 6 months
It has an A+ rating with the BBB and has been accredited since 2007.
Springleaf Personal Loan
Springleaf offers personal loans ranging from $1,500 to $10,000. You can apply for a secured or unsecured loan. You can also apply online and have a decision within a day.
Springleaf has been around for over 90 years, has an A+ rating with the BBB. It is a brick-and-mortar bank with over 800 branches across 27 states. Unfortunately, that means it’s limited to those with branches nearby, as you need to physically sign for the loan.
Its website has minimal information on APRs, terms, and fees for loans, but from the calculator provided, we know the APR range is 15.99% to 39.99%, and 2 to 5 year terms are offered.
Springleaf also has a track record for working with borrowers who have low credit. You need a minimum credit score of 550 to qualify.
What would an example loan look like? If you borrow $4,000 on a 3 year term, at an interest rate of 30%, your monthly payment will be around $169.81.
You can check to see if Springleaf has a pre-qualified offer for you, as it doesn’t affect your credit score. If you do accept its offer, then a hard credit inquiry occurs.
Which Lender is the Best Choice?
It’s largely going to depend on the rates you receive. Luckily, with Avant and Lending Club, you’re able to apply without a hard inquiry on your credit, which allows you to shop around without worry. It’s smart to start with these two lenders and see which of the two offers you better terms.
Here’s a side-by-side comparison of the rates and terms offered by all 3 lenders:
|Amount Borrowed||Up to $10,000||Up to $35,000||Up to $40,000|
|APR Range||15.99% – 39.99%||9.95%-39.95%||5.99% -35.89%|
|Length of Loan||Up to 5 years||Up to 5 years||Up to 5 years|
|Min. Credit Score||550||550||600|
Your best option is to shop around. You can apply to Lending Club, Prosper and Avant without hurting your score. We recommend you start there first.
If you need the money today and live near a Springleaf branch, that is your best option. But if you can wait a day, Avant is able to get the funds to you in one business day.
* We’ll receive a referral fee if you click on the “Apply Now” buttons in this post. This does not impact our rankings or recommendations You can learn more about how our site is financed here.