Bad Credit Loan Rates 2026

A personal loan could temporarily lower your credit scores in a couple of different ways. First, when you apply for a loan, lenders will perform a hard inquiry to check your credit. A hard inquiry can cause a slight temporary drop in your credit scores. If you’re shopping around for a personal loan and applying with multiple lenders, be sure to submit your applications within a 14-day period to help minimize the effect on your credit scores. Some credit-scoring models consider multiple credit inquiries within a two-week timeframe as just one inquiry.

Second, if you’ve recently applied for and taken out other types of loans or credit, your credit scores could take a hit. Several new accounts within a short period can factor negatively into credit-scoring models.

But keep in mind that a personal loan could also help improve your credit in the long term — if you can afford the monthly payments and you make them on-time consistently. Your payment history is a significant factor in calculating your credit scores.

While many loans for bad credit may be technically legal, they can also be financially dangerous. Before you take out a loan, the terms — including the interest rate and any fees — should be clear, and if anything is unclear to you, it’s important to ask about it. The costs and terms of some loans for bad credit, such as payday loans and title loans, could place you in a cycle of deeper debt.

Payday loans, for example, are short-term loans, usually up to $500, that can come with triple-digit interest rates. Typically you can expect to have to pay the loan back in full, plus interest, by your next payday. Lenders usually require that you provide a post-dated check or your bank information so they have a sure way to collect the funds.

Like payday loans, title loans are also short-term loans, but they’re secured by your vehicle and generally range in amounts from 25% to 50% of your vehicle’s value. In order to get a title loan, you’ll have to give the lender the title to your car. When the loan term is up, typically 15 to 30 days after you get the cash, you’ll have to pay it back in full, plus any fees or interest you’ve incurred. Title loans have an average monthly finance fee of 25%, which equals roughly a 300% APR. If you can’t pay the lender back, it could take your vehicle as payment.

If you have poor credit or no credit history at all, a payday lender might seem like a good option. Payday lenders typically don’t perform credit checks, and the cash might be available to you immediately. But easy doesn’t always mean better.

Payday loans are generally only available in small amounts of $500 or less, and payment may be due as early as your next payday. These types of loans also tend to have very high fees — which equate to APRs as high as 400% or even higher. Some states may regulate the maximum rates allowed for payday loans, and others don’t allow these loans at all because of their high costs.

Instead of getting a payday loan, you may want to consider using a paycheck advance app, which could help you borrow a small amount of money against your next paycheck with no interest charged or credit check required.

People with less-than-perfect credit or no credit history may want to look for a lender that will consider more than just your credit scores when you apply. While these types of lenders may check your credit history during the loan application process, they usually also look at other factors, such as your income and employment history, to help determine your ability to pay back the loan. The APRs with these lenders can be high, but they may not be as high as that of payday or title loan lenders.

If you only need to borrow a small amount of money to help you get by until your next payday, a loan from a paycheck advance app might be a good alternative. These types of loans generally let you borrow cash against your next paycheck with no interest and typically don’t require a credit check to sign up to use their service.