How to Find the Best Online Loan if You Have Bad Credit

By MoneyLion

Personal loans can give you an extra cash boost and, unlike with an auto loan or a student loan, you can do what you want with your extra cash. However, if you have bad credit, you might find that getting a personal loan can be tough. 

Luckily, bad credit isn’t a permanent condition and getting a loan with bad credit isn’t impossible. You don’t need to wait for your credit to improve to get a loan with a low interest rate.

Here’s how you can make it happen. 

Are There Loans for People with Bad Credit?

If you have bad credit, you’re not alone. Over 37% of Americans have a credit score in the “fair” or “poor” range, according to Experian. If you have a credit score of less than 670, lenders will usually consider you to be a “subprime” borrower or “risky” borrower.

Contrary to what you might think, it’s possible to get a quality loan when you have bad credit. Some banks and other lenders might only offer you a limited amount in a loan, or they may charge you outrageous interest.

However, from online banks to P2P lending services, there are low-cost ways to get a personal loan — even when you need to work on your credit score. 

It’s important to be selective with the type of loan you choose. Look for a lender that doesn’t require credit checks before issuing you a loan. It’s also a good idea to remember to fully read the terms of your loan before you sign. 

How to Get an Online Loan with Bad Credit

Are you having trouble finding a low-interest loan because of your bad credit? No worries — MoneyLion is here to help.

Follow these six simple steps to find the right loan for you and raise your score at the same time. 

Step 1: Decide How Much Money You Need

The first step in the loan process is to figure out exactly how much money you want to borrow. It’s better to take a smaller loan with smaller payments you know you can manage when you’re rebuilding your credit.

This way, you’ll improve your credit with on-time payments and your improved credit score will qualify you for a bigger amount and better rate in the future.

Here are some common reasons why people take out personal loans.  

Pay bills

Lagging a bit on your bills, such as your credit card bill, medical bills or an auto repair bill? A personal loan can help you cover those costs.

Know exactly how much money you owe before you get a loan, particularly if you have a few bills to cover all at once. Collect all your bills and total them up to see exactly how much you owe.

You’ll want to tackle the highest-interest bills first. Misplaced a bill? Contact your insurance provider (for medical bills) or your service provider and request an additional copy. 

It can be challenging to keep up with all of your credit card balances, so after you’ve paid off your credit card bills, consider using the MoneyLion app to stay on top of your credit cards. The MoneyLion app allows you to securely tally and keep track of your debts across multiple sources.  

Take care of home repair

Did your fridge conk out in the middle of the night? Or maybe your storm door took a beating the last time it was really windy. Minor home repairs are quite common, and it’s easy to spend anywhere from $350 to $500 to replace your refrigerator, for example.

Particularly when home repairs are a necessity, a personal loan can be the quickest way to get a replacement for your much-needed home improvements.

Cover surprise fees

Just realized your kids have club volleyball or soccer fees? Or maybe other surprise school expenses or fees crop up. Emergency travel expenses are another common reason you may want to turn to a personal loan for a low-stress way to take care of expenses. 

Once you’ve got a rough idea of how much you need to borrow, you can begin looking for lenders that fit your needs. 

Step 2: Secure the Lowest Interest Rate

In exchange for giving you a loan, banks charge you interest. Banks and online lenders calculate your interest using a yearly percentage called the annual percentage rate (APR).

APR tells you how much you’ll pay in interest on your remaining balance per year. For example, if you borrow $1,000 on a loan with a 20% APR, you’d pay $200 a year in interest — or about $16.67 per month. Your credit score largely determines the APR you’ll be offered. The higher your credit score, the lower your interest rate will be.

Low APR loans typically carry an interest rate of 8% APR on average. High-interest loans carry interest rates up to 36% or higher for those with bad credit and can be difficult to pay back, so try to avoid them if you can. 

No matter how much you need to borrow, there’s one loan source that you should always avoid — predatory payday advance loans.

Payday loan lenders charge high fees because they’re intended only for very short-term usage. It’s not uncommon to see payday loans with APRs of over 700% per year. If you take out a payday advance loan for $1,000 with an APR of 400% (on the lower end for these loans), you’ll pay over $10.75 a day in interest. 

A high APR can make it very difficult to pay back your loan. One of the most important things you’ll need to do when you search for a loan provider is to compare interest rates.

Choose a bank that offers you a low APR without a credit check. For example, MoneyLion offers a low APR on its personal loans, as well as 0% APR cash advances up to $250 when you link your direct deposit to your free MoneyLion checking account.

Step 3: Prepare Documentation and Personal Information

You’ll need to provide a little bit of personal information before you get a loan. Having your documents ready when you apply can get you your money faster.

Some of the documentation you might need includes: 

  • Proof of ID: Every bank will require you to have some form of photo ID before you can get a loan. Some valid forms of photo ID include driver’s licenses, state-issued ID cards, passports and military IDs.
  • Your Social Security number: Your bank may require you to submit your Social Security number before you can get a loan. Keep your personal data safe by only offering your Social Security number to banks you trust.
  • Other personal information: Your bank or lender will also need your current address, phone number and birthdate.
  • Proof of income: Unlike a mortgage or an auto loan, personal loans are unsecured, which means they aren’t backed by collateral. Your bank might ask you to prove that you have enough income to cover your payments by requiring a tax return or pay stub before you can get a loan.

Your bank might also have additional loan application requirements. Check before you apply for a loan to be sure that you have all your documentation in order. 

Step 4: Apply for the Loan 

Once you’ve chosen a lender and you have your documents in order, it’s time to apply for your personal loan. Fill out the application and include any necessary documentation with your application.

The specific forms that you’ll need to fill out and the information you’ll need to provide will vary depending on where you get your loan. The MoneyLion app just requires you to scan your driver’s license. You don’t need to gather any other materials, such as additional paperwork.

Thinking about getting a loan with MoneyLion? First, download the app from the Google Play or Apple App store. Apply for a MoneyLion Credit Builder Plus membership with credit builder loans and enter your personal information. As soon as you get approved, you’re eligible for up to a $1,000 personal loan at a low APR. 

Step 5: Get Approval

After you submit your application, wait for the approval. You can speed up the loan application process by double-checking that you’ve submitted all of your information correctly and that you respond to any bank inquiries quickly. 

If you’re getting your loan through MoneyLion, you won’t need to sit around and wait for a decision. Once you’re a Credit Builder Plus member, you’ll see your personal loan instantly deposited into your account as soon as you request it. 

Step 6: Pay Your Loan Back

Congratulations! You’ve gotten approved for your loan — be sure you start thinking early on about how you’ll pay it back.

When you’re approved for a loan, your lender will tell you exactly when loan payments are due. Write down your payment due date and your minimum balance so you remember to pay it back on time each month.

You may even be able to enable automatic bill pay through your bank so you’ll never forget a payment.

Most banks accept a few different types of repayment methods. Wire transfers, direct debits, personal checks and certified cashiers’ checks are four of the most common ways to pay.

If you get your loan through a physical bank, you may be able to pay in cash as well. Most banks don’t accept credit card payments. Ask about acceptable payment methods as soon as you accept the terms of your loan. 

Benefits of Getting Your Loan with MoneyLion

Need a quick and easy way to get a loan with bad credit? MoneyLion might be the right bank for you. Read on to learn a few of the benefits that MoneyLion Credit Builder Plus members get when you take out a personal loan.  

Speed and convenience: MoneyLion personal loans are instantly approved. You’ll see the money deposited directly into your MoneyLion Checking account — you won’t have to wait days or even weeks for approval or funding. 

Credit-building: MoneyLion loans are proven to build credit. Seventy percent of members say that their scores increased when they paid back their MoneyLion loan on time. 

Low APR: With MoneyLion, you can get a credit builder loan with a low APR, lower than most traditional banks and credit cards offer.  

Cash today: You can get Credit Builder Loan with up to $1,000 deposited into your bank account today. If you need another loan after you pay it off, there’s no need to reapply later.

Credit is not a factor: Credit doesn’t play a role in your MoneyLion loan application. If you’ve got bad credit or you’re still working to build credit, a loan from MoneyLion can get you the money you need with an interest rate you can actually afford.     

Achieve Your Financial Goals with MoneyLion

Getting a low-interest loan when you have bad credit can be tough — but it’s not impossible. Understanding your options can help you avoid predatory loans and make sure you’re getting the lowest rate possible.

Are you ready to take advantage of a low APR loan from MoneyLion? All the benefits of a MoneyLion Credit Builder Plus membership are just a few taps away. Just download the MoneyLion app to get started. 

MoneyLion Checking Account provided by, and MoneyLion Visa® Debit Card issued by, Lincoln Savings Bank, Member FDIC. Terms and conditions apply.

Current Credit Builder Plus membership required for Credit Builder Plus loan eligibility; the $19.99 monthly fee will be withdrawn from your linked bank account.  All Credit Builder Plus loans are made by either exempt or state-licensed subsidiaries of MoneyLion Inc. The Credit Builder Plus loan may, at lender’s discretion, require a portion of the loan proceeds to be deposited into a reserve account managed by ML Wealth, LLC and held by Drivewealth LLC, member SIPC and FINRA. The funds in this account will be placed into a money market cash management or FDIC bank sweep vehicle, and may generate interest at prevailing market rates.  You will not be able to access the portion of your loan proceeds held in the credit reserve account until you have paid off your loan, and so long as your Credit Builder Plus membership payments are current. If you default on your loan, your credit reserve account may be liquidated by the lender to partially or fully satisfy your outstanding indebtedness. May not be available in all states.Credit Reserve Accounts Are Not FDIC Insured • No Bank Guarantee • Investments May Lose Value. For important information and disclaimers relating to the MoneyLion Credit Reserve Account, see Investment Account FAQs and FORM ADV.

A Credit Builder Plus loan may or may not improve your credit score. Credit scores are the result of your personal credit practices.

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