Personal loans are a popular way to finance large expenses like weddings or home renovations, but they can also be used for an unexpected expense that's larger than your emergency fund.
The loan category, unofficially known as hardship personal loans, is often available to borrowers with lower credit scores. CNBC Select rounded up the best lenders for hardship loans, looking at key factors like interest rates, fees, loan amounts and term lengths, plus other features, including fund distribution, autopay discounts and customer service.
To learn more about how we made our choices, read our methodology.
Best hardship personal loans for bad credit
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Best for people without a credit history: Upstart
Who's this for? Upstart is ideal for individuals without a sufficient enough credit history to qualify for most other loans and forms of credit. This lender is also ideal for those who do have a credit score that's on the lower end.
Standout benefits: You can choose a three-year or five-year loan and borrow anywhere from $1,000 to $75,000. Plus, Upstart may be able to disburse your funds quickly. You can get your money as soon as the next business day if you accept the loan before 5 p.m. ET Monday through Friday.
One other major draw for Upstart is that this lender doesn't charge any prepayment penalties. In other words, if you choose to pay off your loan early, you won't be hit with a fee as a consequence.
We like that Upstart considers factors besides credit score, including education, income and employment history. However, co-signers aren't accepted.
- Accept applicants with bad or no credit
- Minimum APR is lower than many competitors'
- Approves personal loans up to $75,000
- Most loans are funded the next business day
- Origination fee of 0% to 10%
- Doesn't allow co-signers or co-borrowers
Best for flexible terms: OneMain Financial
Who's this for? OneMain Financial is a good option for people who want different options when it comes to the length of the repayment period. Borrowers can choose between term lengths ranging from 24 to 60 months.
OneMain offers loan amounts ranging from $1,500 to $30,000 (this can vary by state). This lender also doesn't charge any early payoff penalty fees. However, they do charge origination fees of either a flat fee ranging from $25 to $500 or a percentage of the loan you've taken out, ranging from 1% to 10%, depending on your state. Late fees can cost up to $30 per late payment or 1.5% to 15% of the late amount of your last monthly payment.
Standout benefits: While most personal loans are unsecured, OneMain Financial offers borrowers the option of using collateral to receive better loan terms, like a lower interest rate.
We like that OneMain accepts borrowers with bad credit and offers secured loans and fast funding. However, its minimum APR is on the high side and the $30,000 financing maximum may be too low if you need a larger loan.
- Approves applicants with bad/fair credit
- Same-day funding available
- Can apply with collateral
- Co-applicants allowed
- High origination fee
- High minimum interest rate
- No autopay discount
- Co-signers not allowed
*You must complete a loan application and continue to meet any criteria used to select you for a loan offer. Not all applicants are approved. Loan approval and actual loan terms depend on applicant's state of residence and ability to meet OneMain Financial credit standards such as a responsible credit history, sufficient income after monthly expenses, and if applicable, availability of eligible collateral.
Not all approved applicants qualify for larger loan amounts, lower APRs, or the most favorable loan terms. For example, larger loan amounts typically require a first lien on a motor vehicle that is no more than ten years old, meets our value requirements, and is titled in applicant's name with valid insurance. APRs are generally higher on loans not secured by a vehicle.
Example Loan: A $6,000 loan with a 24.99% APR that is repayable in 60 monthly installments would have monthly payments of $176.07.
OneMain charges origination fees allowed by law. Depending on the state where the loan is opened, the origination fee may be either a flat amount or a percentage of the loan amount. Flat fees vary by state, ranging from $25 to $500. Percentage-based fees vary by state, ranging from 1% to 10% of the loan amount subject to certain state limits on the fee amount.
For information about these fees and minimum and maximum loan sizes available in certain states, visit omf.com/loanfees.
Current OneMain Customers: Loan offers presented to a consumer assume the individual has no active loan with OneMain or one of its affiliates. If a customer applies for a new loan offer, a OneMain representative will discuss available options.
Active-duty military, their spouse or dependents covered by the Military Lending Act (MLA) may not pledge any vehicle as collateral. If you are covered by the MLA, you are not eligible for secured loans.Loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB's Regulation Z such as college, university or vocational expense; for any business or commercial purpose; to purchase cryptocurrency assets, securities, derivatives or other speculative investments; or for gambling or illegal purposes.
Time to Fund Loans: Funding within one hour after loan closing through SpeedFunds® must be disbursed to a bank-issued debit card. Disbursement by check or ACH may take up to 1-2 business days after closing.
Best for quick funding: Avant
Who's this for? Avant Personal Loans can be a good option for those who need money in a pinch. If you manage to be approved by 4:30 p.m. CT Monday through Friday, you can receive your funds as early as the next day. Of course, quick funding can also depend on whether or not you have submitted all the necessary information in a timely manner. You can borrow as little as $2,000 and as much as $35,000, and loan terms range from 24 to 60 months. The origination fees range from 0% to 4.75% of the loan amount. Also, keep in mind that this lender charges a late fee of $25 if you don't make your payment within ten days after the due date.
Standout benefits: This lender also lets you check to see if you prequalify for the loan without harming your credit score. If your credit score isn't great, you can still get approved since Avant looks at both your credit score and income.
This online lender approves borrowers with lower credit and income requirements than many competitors. We also like its speedy approval process and next-day funding, although it won't pay your creditors directly if you have a debt consolidation loan. The APR and origination fee for applicants with weak credit can be high, but the tradeoff may be worth it if you've been unable to get approved elsewhere.
- Lends to applicants with poor credit
- Funding often available next day
- Late-payment grace period of 10 days
- Origination fee of up 9.99%
- No autopay discount
- Doesn't offer direct payment to creditors for debt consolidation loans
- No co-signers or collateral
Best for fast approval: LendingPoint
Who's this for? LendingPoint offers pre-qualification so you can check potential loan terms without impacting your credit score. But the biggest appeal to LendingPoint is that this lender will inform you of the approval decision within seconds of applying. Generally, it will take one business day to receive the funds.
There is, however, a minimum annual income requirement of $35,000 to qualify to apply for the loan, and these loans are not available to residents of Nevada or West Virginia. When determining eligibility for a loan, LendingPoint considers credit score, loan term, credit usage, loan amount and other factors.
Standout benefits: Loan amounts range from $1,000 to $36,500, and the length of the loan term can be anywhere from 24 to 72 months. The origination fees range from 0% to 8% of your total loan amount.
LendingPoint stands out for offering personal loans to borrowers with fair credit and for providing fast funding. Interest rates can be relatively high and borrowers may face origination fees, so the cost of borroweing can add up. Prequalify to get a estimate of the rate, terms, and borrowing amount you'll be approved for.
- Next-day funding available
- Personal loans start at just $1,000
- Direct pay to creditors available with debt consolidation loans.
- Origination fee can be up to 10%
- Doesn't allow secured loans or co-borrower or co-signers.
- Not available in all states.
Who's eligible to apply for a LendingPoint loan:
- You must be at least 18 years of age.
- You must be able to provide a U.S. federal, state or local government issued photo ID.
- You must have a social security number.
- You must have a minimum annual income of $40,000 (from employment, retirement or some other source).
- You must have a verifiable personal bank account in your name.
- You must live in one of the states where LendingPoint does business (excludes Nevada and West Virginia).
What is considered a bad credit score?
Here is how lenders classify "fair" and "poor" credit scores:
FICO Score
- Very poor: 300 to 579
- Fair: 580 to 669
- Good: 670 to 739
- Very good: 740 to 799
- Excellent: 800 to 850
VantageScore
- Very poor: 300 to 499
- Poor: 500 to 600
- Fair: 601 to 660
- Good: 661 to 780
- Excellent: 781 to 850
Scores lower than 670, and certainly scores lower than 600, will most likely disqualify you for the most affordable personal loans. But if you're in a pinch, it's not all-out impossible to get a loan with a credit score in the high 500s or low 600s.
Can I pre-qualify without hurting my credit score?
It is possible to pre-qualify for a personal loan without hurting your credit score. Do some research before you apply. Read reviews and learn what to consider before agreeing to take on a loan. When you're ready to apply, follow these steps to avoid hurting your credit score too much.
- Shop around for the best rate. Avoid hard inquiries by knowing your credit score before you submit a formal application so you know what you might qualify for. Many lenders will allow you to submit a prequalification form. Or consider using a lending platform (such as Upstart or LendingTree) to view multiple offers at once.
- Decide on the best offer. Choose the loan with the best monthly payment and interest rate for your budget. Be sure to look at how much the loan will cost you over the full length of the term and decide if the cost is worth it.
- Submit a formal application. Have your social security number on hand, as well as supporting documents such as bank statements and paystubs.
- Wait for final approval. This could take just a few minutes, an hour or up to 10 days. To facilitate speedier approval, apply during normal business hours and submit the required documents right away.
- Get your funds. Once your loan is approved, you'll be asked to input your bank account information so the funds are deposited into your account. You may also be able to request a paper check from your lender, or in the case of a consolidation loan, you may be able to have funds sent right to your creditors.
Secured vs. unsecured loans
A secured loan is a loan backed by collateral. The most common types of secured loans are mortgages and car loans, where the collateral is your home or car. But really, collateral can be any kind of financial asset you own. And if you don't pay back your loan, the bank can seize your collateral as payment. A repossession stays on your credit report for up to seven years.
An unsecured loan requires no collateral, though you're still charged interest and sometimes fees. Student loans, personal loans and credit cards are all examples of unsecured loans.
Since there's no collateral, financial institutions give out unsecured loans based in large part on your credit score, income and history of repaying past debts. For this reason, unsecured loans may have higher interest rates (but not always) than secured loans.
How can you use a personal loan?
Generally speaking, a personal loan can be used for pretty much any purpose, including car repairs, home repairs, emergencies, vacations and so much more — that's why it's called a personal loan. There are some purposes that may be prohibited by the lender, like using the loan to pay for school, business expenses and, of course, illegal activities. You should read the terms and conditions of the loan before accepting it.
If you're using a personal loan for hardships, you may use it to cover crucial home repairs, fix your car, an emergency move, a hospital bill and more.
FAQs
Do personal loans build credit?
Personal loans are a form of installment credit, which affects both your credit report and your credit score. Having both installment and revolving credit in your profile will strengthen your credit mix.
Are hardship loans a good idea?
The first line of defense for any major unexpected expense should be your emergency fund. However, sometimes the funds you saved may not be enough to cover the entirety of your expense — or, you may not have been able to build one at all.
To determine whether a hardship loan is a good idea, you'll want to consider your personal financial situation and seek personalized advice from a financial expert. Hardship loans may make the most sense for individuals who don't have enough cash in their emergency fund to float a large expense but can create a reasonable plan for paying off the loan in its entirety.
What qualifies as a financial hardship?
A financial hardship is a situation where your income has gone down or your expenses have gone up significantly due to an unexpected event. A financial hardship usually entails not being able to pay your necessary expenses, like medical bills or rent. Financial hardships are typically the result of illness, unemployment, or the death of a family member, but can include many other reasons. In many cases, you'll need to provide proof of your financial hardship, like a letter from your doctor if the hardship is illness-related.
What is the easiest loan to get approved for?
The easiest loan to get is a payday loan, short-term financing aimed at borrowers who need money quickly. However, payday loans can charge exorbitant interest rates (sometimes as high as 400%) and are not recommended by the Consumer Financial Protection Bureau.
How fast can you get a personal loan?
Many personal loan lenders can give you a same-day decision providing that you submitted all your paperwork in a timely manner and there are no errors or missing information. Typical funding timelines after approval can range from one to three business days. Some lenders can provide same-day funding if you are an existing customer and own a bank account provided by the lender.
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At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed financial decisions. Every loan article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of personal loan products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
Our methodology
To determine which hardship personal loans are the best for consumers with bad credit, CNBC Select analyzed dozens of U.S. personal loans offered by both online and brick-and-mortar banks, including large credit unions. When possible, we chose loans with no origination or sign-up fees, but we also included options for borrowers with lower credit scores on this list. Some of those options have origination fees.
When narrowing down and ranking the best personal loans, we focused on the following features:
- Fixed-rate APR: Variable rates can go up and down over the lifetime of your loan. With a fixed rate APR, you lock in an interest rate for the duration of the loan's term, which means your monthly payment won't vary, making your budget easier to plan.
- Flexible minimum and maximum loan amounts/terms: Each lender provides more than one financing option that you can customize based on your monthly budget and how long you need to pay back your loan.
- No early payoff penalties: The lenders on our list do not charge borrowers for paying off loans early.
- Streamlined application process: We considered whether lenders offered same-day approval decisions and a fast online application process.
- Customer support: Every loan on our list provides customer service available via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
- Fund disbursement: The loans on our list deliver funds promptly through either an electronic wire transfer to your checking account or in the form of a paper check. Some lenders (which we noted) offer the ability to pay your creditors directly.
- Autopay discounts: We noted the lenders that reward you for enrolling in autopay by lowering your APR by 0.25% to 0.5%.
- Creditor payment limits and loan sizes: The above lenders provide loans in an array of sizes, from $1,000 to $100,000. Each lender advertises its payment limits and loan sizes, and completing a preapproval process can give you an idea of what your interest rate and monthly payment would be for that amount.
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