Installment loans to those with bad credit make it possible for borrowers with a low or limited credit history to get the funds they require. If you’ve got bad or bad credit according to FICO (a score between 350 and 579), It’s highly unlikely you’ll be able to get a personal loan. However, the lenders who are listed here offer loans to potential borrowers with credit scores of 580 to 600.
The interest rates you offer differ based on your credit score and the conditions you must meet. So, don’t be expecting to get the lowest or highest rates with bad credit scores. But, the objective is not to secure the best rates but to find the right lender to offer the loan you are eligible for. There is a list of the best lenders to pick from.
Best Installment Loans for Poor Credit
We evaluated 29 top lenders using 16 data points from the areas of loan information, including fees for loans, eligibility, access, customer experience, and the application process. We selected the top lenders according to the weighting given to each of the categories:
- Accessibility and eligibility Accessibility and eligibility: 30 percent
- The cost of borrowing is: 25 percent
- Loan details: 20%
- Customer experience: 15%
- The application process is 10%.
We also looked at various characteristics within each major category, such as available loan amounts, repayment terms, APR ranges, and applicable fees. We also examined the minimum credit scores, whether every lender allows co-signers and joint applications, and the lending institution’s geographical availability. In addition, we analyzed the customer support tools offered by each lender, including perks for borrowers and features that make borrowing easier, such as the option to prequalify and mobile applications.
If necessary, we award partial points according to the extent to which a lender had fulfilled each criterion.
What are Installment Loans Bad Credit?
The installment loans available to those with bad credit are secured or non-secured loans designed specifically for people with weak credit scores. They are also suitable for consumers who don’t yet have a stable credit background. Due to the risk that borrowers who aren’t qualified are, installment loans typically come with greater interest rates, lower loan amounts, and shorter repayment timeframes.
Like most installment loans, the loan is paid out as one lump sum, and interest starts accruing on the balance within the initial month. The borrower must make monthly payments until the loan period expires and the remaining balance is paid back. The most commonly used installment loans include personal loans such as auto loans, mortgages, and auto loans.
Certain lenders focus on loans to borrowers with bad credit and impose less strict requirements on applicants. Other financial institutions might have fewer credit scoring requirements but provide the option to obtain co-signers or a borrower who is a co-signer. Secured loans require less stringent credit score requirements since they carry less risk for lenders.
If you are considering an installment Credit for Bad Credit
You might want to consider the possibility of an installment loan for bad credit if you have a FICO score of 580 to 600. In addition, if you’ve got an unsatisfactory credit profile — or no credit history, you could get a bad credit installment loan.
You must have enough monthly cash flow to repay an installment loan, including interest and fees. Use Dimebucks personal loan calculator to see whether an installment loan is a good idea.
How to Select an Installment loan for bad Credit
Bad credit consumers have fewer financing possibilities than others. You must compare lenders to discover the best bad-credit loan deal. Before picking a lender, follow these steps:
- Evaluate minimum qualifications. Most lenders require minimal credit score requirements, making it challenging for borrowers with bad credit to qualify. If you have a poor credit rating or a small credit profile, consider an option that does not require strict requirements.
- Low-credit borrowers are less likely to get low-interest rates from conventional lenders. Loans for less-qualified applicants offer cheaper rates. Lenders provide reduced interest rates. Look for poor credit installment loans with variable APRs.
- Prequalify. Many online lenders offer prospective customers the opportunity to determine what interest rate they’re likely eligible for without undergoing a credit inquiry. If you’re considering an installment loan with bad credit, prequalify with multiple lenders to ensure you receive the best rate possible.
- Take into consideration fees and other expenses. In addition to the credit’s annual percentage rate, compare lenders based on the number of fees they charge, such as prepayment penalties or late payment charges. Bad credit loans typically have higher costs, and these expenses can be added to the total price of borrowing.
- Calculate monthly installments. Use a personal loan calculator to determine the monthly payments for different loan options based on the available loan amounts, APRs, and repayment conditions. This can allow you to find the best loan deals while ensuring that the loan amount is within your monthly budget.
- Read reviews from customers. Before you sign a contract with a lender, check out online reviews of past and current customers. Websites such as Better Business Bureau (BBB) and Trustpilot can assist in identifying warning signs such as a long or complex approval process, excessive APRs, or poor customer service.
How can bad credit installment loans affect your credit score?
They typically report all payments made to three major credit bureaus–Equifax, Experian, and TransUnion. Due to this, paying on time and in a consistent manner will help increase your credit score. Your payment history is responsible for 35 percent of the FICO score. But, late payments or not paying a loan could negatively affect your score. To assist with this, many lenders provide autopay options that allow you to set up prices.
Installment loans can also boost the quality of your credit score by providing diversification in your credit mix which accounts for 10 percent of your FICO. Also, getting an installment loan can help build your credit history, which is responsible for 15 percent of the FICO score. Therefore, even though these elements aren’t as important as credit history, they can assist in helping in building credit in the long run.