Bad Credit Loan Rates 2026
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Common uses for a personal loan
Questions about personal loans††
Here are some common questions from our members.
Are personal loans bad for your credit?
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.
Are loans for bad credit legit?
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.
How can I get a quick loan with bad credit?
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.
What’s the easiest loan to get with bad credit?
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.
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Best small loans for bad credit of 2026
Updated October 22, 2026
This date may not reflect recent changes in individual terms.
Editorial Note: Intuit Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our third-party advertisers don’t review, approve or endorse our editorial content. Information about financial products not offered on Credit Karma is collected independently. Our content is accurate to the best of our knowledge when posted.
Written by: Anna Baluch
Edited by: David Heiling, Editorial Lead, Auto & Insurance
Key Takeaway: Personal loan options for people with lower credit scores include credit-builder loans, paycheck advances and small loans with terms geared toward subprime borrowers — but, those terms may be risky and could make it hard to keep up with your payments.
Whether the month lasts longer than your paycheck does or an emergency expense pops up, sometimes you might consider getting a small loan for extra cash.
The good news is that many lenders offer small loans for bad credit. The bad news is that some of these loans are risky and can hinder financial wellness and progress.
We’ll review our picks for best small loans for bad credit, and the types of loans you should avoid if possible as well as alternatives to consider.
- Good for paycheck advances: Dave
- Good for choosing your loan terms: Rise
- Good for building credit: Possible Finance
- Good for flexible repayment: MoneyKey
- Good for retail purchases: Cash App Afterpay
- Good for access to your credit score: Personify
- Good for checking your potential rate: PenFed Credit Union
- What is a small loan for bad credit?
- When is a small loan for bad credit a good idea?
- What are some alternatives to small loans for bad credit?
- FAQs about small loans for bad credit
Good for paycheck advances: Dave
Why Dave stands out: Dave offers paycheck advances of up to $500. There is a small fee to transfer money to your bank account but no interest charges. You typically pay your advance back when you receive your paycheck.
Pros
- No interest charges
- Also offers a bank account with early paycheck access
- No late fee
Cons
- Must link bank account to see if you’re eligible
- Fee for faster access to cash
Learn more about Dave cash advances in our review.
Good for choosing your loan terms: Rise
Why a personal loan from Rise stands out: Depending on where you live, you can borrow as little as $500 and up to $5,000 from Rise. Depending on where you live, you also may be able to choose your own payment terms to find something that works with your budget.
Pros
- Payment extensions offered
- Can help you build credit (but doesn’t report to all credit bureaus)
- Free TransUnion credit score monitoring
Cons
- APRs can reach into triple digits
- Only short loan terms
- Not available in all states
Read reviews about Rise loans to learn more.
Good for building credit: Possible Finance
Why a personal loan from Possible Finance stands out: Since Possible Finance reports to some major credit bureaus, it can help you build credit. But in order to benefit from that, you’ll need to make your loan payments on time and in full.
Pros
- Small loan amounts up to $500
- Fast funding possible
Cons
- APRs well into triple digits
- Only short repayment terms
- Not available in every state
Read reviews about Possible Finance loans to learn more.
Good for flexible repayment: MoneyKey
Why a personal loan from MoneyKey stands out: Your loan term, or the period when you’ll pay back your loan, will depend on where you live but may be up to 12 months. You’ll need to repay the money you borrow monthly, semi-monthly or bi-weekly, depending on how often you get paid. Loan amounts depend on where you live but typically range from $200 to $2,500.
Pros
- Cancellation option within three days
- Same-day funding possible
Cons
- APRs well into triple digits
- Not available in most states
- No option to refinance the loan
Good for retail purchases: Cash App Afterpay
Why a loan from Cash App Afterpay stands out: Cash App Afterpay allows you to make purchases at participating in-person and online retailers and pay the balance off in four installments over six weeks. This can be particularly useful for small, essential purchases. Loan amounts depend on the merchant, but Cash App Afterpay says they typically range from $400 to $4,000.
Pros
- Spread payments out over time
- No hard credit inquiry to borrow money
- No upfront fees or interest if you pay on time
Cons
- Late payment fees
- Loan approval isn’t guaranteed at purchase time
Read our Cash App Afterpay review to learn more.
Good for access to your credit score: Personify
Why a personal loan from Personify stands out: Personify provides access to your credit score, which can help you monitor your credit health. You can prequalify for a personal loan from Personify without affecting your credit score. Loan amounts differ based on where you live but typically range from $500 to $15,000.
Pros
- Considers borrowers with lower credit scores
- Next-day funding possible if approved
Cons
- Extremely high interest rates
- May face a loan origination fee
- Not available in all states
Good for checking your potential rate: PenFed Credit Union
Why a personal loan from PenFed Credit Union stands out: PenFed Credit Union allows you to prequalify and check your potential rate without affecting your credit score, allowing you to preview your potential terms before committing.
Pros
- No origination fees
Cons
- Full APR range not disclosed
- Must be a credit union member
What is a small loan for bad credit?
Lenders typically consider people with credit scores below 580 as having poor credit. Having below-average credit means you’ll receive less-favorable loan terms and interest rates.
Choosing a longer term can make your monthly payments more affordable, but it’ll significantly increase the total amount of interest you’ll pay over the life of the loan.
Average monthly payments for a $3,000 unsecured loan by loan duration and credit score range
1-12 months:
- Excellent credit: $274.17
- Good credit: $299.50
- Average credit: $381.36
- Poor credit: $471.08
13-24 months:
- Excellent credit: $150.07
- Good credit: $161.78
- Average credit: $194.78
- Poor credit: $245.50
25-36 months:
- Excellent credit: $102.08
- Good credit: $111.44
- Average credit: $122.19
- Poor credit: $137.91
37-48 months:
- Excellent credit: $91.00
- Good credit: $98.78
- Average credit: $106.80
- Poor credit: $115.61
Note: Average monthly loan payments are based on aggregate TransUnion credit report data from Credit Karma members with active personal loans. Data was pulled on November 10, 2025.
A small loan may be a good solution for covering an emergency or unexpected expense. But when it comes to loans for people working on fixing their credit, some options may be better than others.
Here are some common types of small loans you may want to consider extra carefully before signing up.
Payday loans
A payday lender might seem like a good option if you’re strapped for cash but don’t have the best credit. After all, these lenders may not perform credit checks, and generally the application process allows you to get your money quickly.
Payday loans are short-term loans that are typically $500 or less and are usually due on your next payday. You’ll often hear of them as a way to bridge a financial gap until you get paid again.
But since payday loans typically come with sky-high costs that can equate to a 400% or more APR, they can easily trap you in a cycle of debt — especially if you can’t repay them when they’re due.
Some states even ban payday loans because of their costly rates and fees, so they may not be an option where you live.
Title loans
Like payday loans, title loans can have very high fees. With a title loan, you pledge the title to your car in exchange for the loan.
Title loans can cost you your vehicle if you fail to pay up. And because the higher interest rates on these loans can make them difficult to pay off, that’s a risk you may not want to take.
Pawn shop loans
You may also be familiar with pawn shop loans. With these loans, you’ll bring in an item of value in exchange for a small loan up to the value of the item. You can do so even if you don’t have any credit, a bank account or a job.
If you want the item back, you’ll have to repay the loan before the term is up (the term will vary state to state). Even then, you may have to pay expensive fees and interest.
If you don’t repay the loan, the pawn shop can keep the item and sell it — and typically none of the money from the sale goes to you, the former owner).
When is a small loan for bad credit a good idea?
Navigating financial challenges can be incredibly stressful, especially if you’re already dealing with a cash-flow crunch. If you’re considering a small loan with less-than-perfect credit, it’s important to understand how the loan will affect you in the short- and long-term.
While getting a loan with bad credit can provide immediate financial flexibility, they often come with higher interest rates and miscellaneous fees that can add to your financial burden in the long run. But there are situations where a small loan might be a good idea:
- Emergency expenses: If you have an urgent, unavoidable expense — like a medical bill, car repair or essential home maintenance cost — a small loan can help you manage those costs.
- Lowering interest rates: Sometimes, taking out a small loan can help you consolidate your debt. For example, you could save money by using a loan with a lower interest rate to pay off your high-interest credit card balance.
Breaking the paycheck-to-paycheck cycle is tough, but small, consistent steps can make a measurable difference. Consider adopting a “pay-yourself-first” mindset and set aside a small amount from each paycheck into a savings account to start growing your savings.
How to choose a loan for bad credit
The first step to choosing a loan for bad credit should be to check your credit score. Once you know the state of your credit, you can start looking for lenders that offer loans to people with similar credit profiles to yours. If it’s possible, it’s a good idea to shop around and get prequalified with multiple lenders, so you can find the best rates and terms for you. Keep your budget in mind when choosing a loan for bad credit and make sure you’ll be able to pay off the loan every month.
What are the best personal loans for bad credit?
The best personal loan for bad credit depends on your financial situation and the lender’s offer. Secured personal loans or paycheck advances may be easier to get with bad credit than unsecured loans because they use collateral.
If you’re looking for an unsecured loan, first prequalify with lenders that consider factors besides your credit scores. These lenders often look at employment history and income in addition to credit scores when evaluating applicants. Keep in mind that interest rates may be higher with these lenders because they are designed for people with bad credit, but they likely won’t be as high as payday loans.
Before you take out a personal loan make sure you can afford the payments. On-time payment history is one of the biggest factors in your credit scores, so building a positive history will help you improve your credit over time.
What are some alternatives to small loans for bad credit?
If you can’t qualify for a loan or want to avoid them altogether, you can look into a few other options.
Payday alternative loans
Some federal credit unions offer affordable loans called payday alternative loans, or PALs. There are two types of payday alternative loans. Both have interest rates capped at 28%, varying loan amounts up to $2,000 and six- to 12-month maximum terms. Depending on the PAL, nonsufficient fund charges or overdraft fees may be charged.
Credit-builder loans
Credit-builder loans might make sense if you want to build or improve your credit scores and you’re not pressed for cash at the moment. A credit-builder loan may also help you build up some savings.
Here’s how it works: If you open a credit-builder loan of, say, $500 (amounts usually range from $300 to $1,000), the lender will put that amount of money on hold in an escrow account for you.
You can’t access that principal amount right away. Instead, you’ll make installment payments over a period of time — typically six to 24 months.
Once your installment payments add up to the principal amount, plus interest and fees, the principal amount in the escrow account is released to you. And all the payments you made will be on your credit report, hopefully leaving you in a much better financial position than when you started.
Payment assistance
Asking for financial help can be tough. But if you’re short a small amount of cash, your credit card company may offer a hardship plan to reduce interest and lower your payments. A landlord may consider some sort of repayment agreement if you’re behind on rent.
Your utility company or another state or local organization may offer a payment assistance program to help cover the costs of your utilities. It may allow you to break up a monthly bill into installments.
If you feel embarrassed or ashamed about approaching your creditors, remind yourself that you’re simply taking action to get your finances on track. Be proud of stepping up to look for a solution that might be best for your short- and longer-term financial health.
Home equity line of credit
If you own your own home, another option is to apply for a home equity line of credit, or HELOC for short. This allows you to tap into the equity you’ve built up in your home.
If you get approved for a HELOC, you’ll likely be able to withdraw money during the “draw period” with a credit card or check. If you choose to spend some of this money, you’ll need to make minimum payments on the outstanding balance until the draw period ends.
Then, the line of credit often converts into a “repayment period,” where you repay any outstanding balance over time or all at once, depending on your HELOC’s terms.
But remember that HELOCs have risk: If you can’t make your payments, you could lose your home since the credit line is secured by your house.
Friends and family
If all else fails, you can consider asking your friends or a family member for a small loan. It can be smart to get this in writing with terms that include monthly payment amounts, interest charges and due dates.
Treating the agreement as if it’s a loan from a traditional lender can help keep everyone involved on the same page.
The downside of this option is that if you fail to pay the loan back, or if some other dispute comes up, you could hurt your relationship with those closest to you.
Our methodology: How we pick the best personal loans
Credit Karma’s editors evaluate the best personal loans by reviewing key features of dozens of popular lenders. Those features fall into three important categories:
- Affordability: We start by checking if a lender’s rates are competitive: are they higher than average or are they lower than many competitors? From there, we analyze if fees — particularly an origination fee — may make your loan more unaffordable. Last, we’ll check if the lender offers rate discounts for items such as automatic payments that may reduce your rate.
- Customer-friendly features: Taking out a personal loan is a big financial commitment, so we prioritize lenders that make things easier for you. For instance, do they offer a wide range of loan amounts for people with different borrowing needs? Do they offer at least several loan terms to give you more flexibility with your monthly payment? And, crucially, can they fund your loan quickly? A lender will also get bonus points for offering direct payments for debt consolidation or other customer-friendly features.
- Transparency: We believe personal loan terms should be easy to find and decipher. Prequalification, which lets you check what rate you may qualify for without a hard credit inquiry, is particularly important. We also check to see if a lender has been recently penalized by regulators.
Estimate personal loan costs
To better understand the total cost of any personal loans you’re considering, use an online calculator like Credit Karma’s simple loan calculator. A loan calculator can help you estimate your monthly payment and how much you’d pay in interest versus principal over the length of the loan.
Frequently Asked Questions
There are some specific lenders — like the ones mentioned in this article — that offer loans for bad credit. Make sure to shop around in order to find the best rates and terms for you.
A secured loan is typically easier to qualify for because of the required collateral. Lenders see these loans as less risky because if you default on your loan, the lender can collect on your collateral to recoup any losses.
It’s possible to get a loan with a bad credit score. There are lenders who cater specifically to people with bad credit — but be aware that the rates and fees associated with these loans can be costly.
*Annual Percentage Rates, terms of loan and monthly payments presented are estimated based upon analysis of information you entered, your credit profile and/or available rate information from lenders. While efforts have been made to maintain accurate information, the loan information is presented without warranty and the estimated APR or other terms presented do not bind any lender. Lenders generally have a range of available APRs (for example, a lender's range might be 5% to 36%) and only borrowers with excellent credit will qualify for the lowest rate available. Your actual APR will depend upon factors evaluated at the time of application, which may include credit score, loan amount, loan term, credit usage and history. All loans are subject to credit review and approval. When evaluating offers, please review the lender's Terms and Conditions for additional details. The loan amount shown here may include possible origination fees charged by the lender. If the lender charges an origination fee, it may be deducted from your loan amount. Consider adjusting your loan amount to account for this. This estimate does not include any optional or add-on products you may be offered by the lender.,Advertiser Disclosure: Offers that appear on this site are from third party advertisers from which Credit Karma typically receives compensation. Except for mortgage loan offers, this compensation is one of several factors that may impact how and where offers appear on Credit Karma (including, for example, the order in which they appear). Other factors may include: your credit profile and what products we think you want. It is this compensation that enables Credit Karma to provide you with services like free access to your credit scores and free monitoring of your credit and financial accounts. Credit Karma strives to provide a wide array of offers for our members, but our offers do not represent all financial services, companies, or products.
††The opinions you read here come from our editorial team. Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors' opinions. Our marketing partners don’t review, approve or endorse our editorial content. It’s accurate to the best of our knowledge when it’s posted.