4 best personal loans from direct lenders for bad credit

Man with laptop sitting at kitchen table researching personal loans with bad creditImage: Man with laptop sitting at kitchen table researching personal loans with bad credit

In a Nutshell

It’s easy to assume you can’t get a personal loan if you have had past credit trouble, but the reality is there are plenty of direct lenders offering loans for bad credit. They key is sorting out reputable companies from potentially predatory ones.
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Shopping for a personal loan with bad credit can be challenging — but you may have options.

Direct lenders for personal loans are pretty much what they sound like — they’re lenders that don’t use an intermediary to approve a loan application or disburse your funds.  

For those who want to go to a direct lender for a personal loan, we’ve rounded up our picks for the best personal loans from direct lenders for bad credit. Keep in mind that qualification requirements can vary from lender to lender, so you should closely examine interest rates and fees to see what offer might make sense for your finances.

Best direct loans overall for bad credit: OppLoans

Why OppLoans stands out: Opploans considers factors aside from your credit scores to assess your qualifications for a loan. It checks your Clarity Services and Experian credit reports, which triggers a soft credit inquiry that doesn’t affect your credit scores.

OppLoans says it also considers factors such as your employment status, income and financial history to determine if you may qualify.

  • Small loan amounts — OppLoans typically offers loan amounts between $500 and $4,000. Loan terms range from nine to 18 months.
  • Funds within a business day — If your loan is verified and approved before 12 p.m. Central time Monday through Friday, you could get your loan funds transferred to your account as soon as the same day. The exact timing will depend on your bank.
  • High interest rates — Interest rates for installment loans at OppLoans are relatively high, ranging from the higher double digits well into triple digits. If you need to borrow money, calculate the total interest you’ll pay and think about whether the monthly payments fit into your budget.

Read our full review of OppLoans personal loans to learn more.

Best direct lender for considering more than your credit scores: LendingPoint

Why LendingPoint stands out: LendingPoint also relies on more than credit scores to make lending decisions. The lender uses proprietary underwriting technology that reviews a full picture of your finances to see if you qualify. Eligibility requirements are also straightforward — you need to be older than 18 with a government ID, Social Security number, verifiable bank account and at least $35,000 in annual income to apply.

  • Flexible loan amounts — LendingPoint offers personal loans from $2,000 to $36,500, which could be helpful if you need to borrow a larger sum.
  • Origination fees — LendingPoint loans have an origination fee of 0% to 10% depending on where you live. Make sure to include that fee in your calculations.

Learn more in our full review of LendingPoint personal loans.

Best direct lender for payday loan alternative: Possible Finance

Why Possible Finance stands out: Possible offers a short-term loan up to $500 (in some states) that you can pay back within two months. Interest is high — averaging well into the triple digits for APR — though this could be lower than what you might get on a loan from a payday lender.

If you can’t qualify for any other loan, Possible could be worth considering as long as you know you can keep up with the repayments.

  • Potentially quick money but not available in all states — Approvals and getting loan funds can happen within minutes — though Possible notes that funding can take up to 5 days in some cases. Possible is not available in all states, though, so check to see if it’s an option where you live.
  • Interest and fees vary by state — Your total financing charge (the amount in interest and fees you you’ll pay on top of the amount you borrow) can be very different from one state to the next. So be sure to read the fine print of your offer and consider whether it’s a cost you can handle — and if it’s worth it.
  • Flexible requirements — Possible does a soft credit check for fraud prevention and identity verification, but good credit isn’t necessary to qualify. Having a bank account in good standing with at least $750 in monthly income can increase your odds of approval.

Read our full review of Possible personal loans to learn more.

Best for secured loans: OneMain Financial

Why OneMain Financial stands out: Even if your credit needs work, you may be able to qualify for a secured loan from OneMain Financial that uses your vehicle as collateral — which could be a benefit, but remember that it puts you at risk of losing your vehicle if you default on the loan. The lender offers personal loans from $1,500 to $20,000, but says that larger loan amounts require a secured loan.     

  • Origination fee Keep in mind that OneMain charges an origination fee to process your loan. Depending on where you live, that fee may be a flat amount or a percentage based on your loan amount.
  • Joint applications accepted You can apply with someone else, so if you have a co-applicant with stronger credit, that may improve your chances of getting approved.
  • Inperson locations If you want to speak to someone in person, OneMain has more than 1,400 locations across the U.S.

Read our full review of OneMain Financial personal loans to learn more.

What you should know about personal loan direct lenders for bad credit

Direct lenders offering loans to borrowers with bad credit typically offer loans with high interest rates. That’s in part because lenders equate lower credit scores with potentially higher risk.

But a direct lender may offer a lower interest rate if it’s a secured loan, meaning it requires that you secure it with collateral.

Before taking out a high-interest loan to make ends meet, it’s important to explore other options first because not being able to pay off principal and interest can lead to a vicious cycle of debt. If you think you need to borrow money to pay a bill, try contacting service providers to see if you can sign up for a payment arrangement for some types of debt instead while you get back on your feet.

If you’re a federal credit union member, check to see if the credit union offers payday alternative loans, also known as PALs. These are small loans with interest rate caps designed to help people cover a financial gap at a more affordable price. If you do end up taking out a high-interest loan, making advanced principal-only payments (if your lender allows them), could help you pay off the loan faster.

How we picked these loans

We looked at direct lenders that may offer loans to borrowers with imperfect credit to review interest rates, fees and loan terms. Then we picked loans that had the most flexible eligibility criteria, repayment terms, transparency and payment options.

About the author: Taylor Medine is a freelance writer who’s covered all things personal finance for the past seven years. She enjoys writing financial product reviews and guides on budgeting, saving, repaying debt and building credit. … Read more.