It’s common to go into debt during the holidays. But if you’re going to do it, it’s important to do it wisely. Holiday loans might be a viable option for you
According to the latest survey by the National Retail Federation, the average consumer will spend $1,007 during the holiday season. About $506 will be spent on gifts for family.
While payday loans offer an easy way to get holiday loans with no credit check, “[they] have the highest interest rates of any legal loans,” says Mike Sullivan, a personal finance consultant with Take Charge America.
The average person will spend more than $1,000 during the holiday season.
“That means it is the most costly way to borrow money.”
The best holiday loans won’t charge you exorbitant interest rates and require repayment in just a couple of weeks.
So if you’re thinking about borrowing for the holidays and your credit isn’t in great shape, here are seven of the best holiday loans to consider.
7 best holiday loans
- OppLoans — Small and large loans with a low credit requirement.
- Avant — Competitive rates and longer loan terms.
- NetCredit — Flexible loan amounts and reasonable rates for borrowers with poor credit.
- RISE — Small loan amounts available and minimal eligibility requirements.
- Jora Credit — Only available in a few states but has flexible credit requirements.
- CashCentral — Funds you loan in 24 hours but only available in certain states.
- CashNetUSA — Installment loans and lines of credit with a wide range of interest rates.
It’s never ideal having to borrow money for the holidays, but sometimes life happens and you run out of options. If that’s the case, these seven loans are worth looking into.
However, the average person only spends $26 (total) in gifts for co-workers, $110 in candy, and $28 in greeting cards.
Avant has a higher credit score requirement than some of the other lenders on this list. However, their interest rates are relatively low and competitive with even some of the best personal loan companies out there.
NetCredit’s interest rates start where Avant’s ends, but its highest rates are lower than the maximum at OppLoans.
The lender also has a fairly wide range of available loan amounts, giving you more flexibility if you need a big loan.
The main drawback to NetCredit is that it only operates in 14 states. So you’ll need to double check with the lender before you apply to make sure you’re eligible.
RISE loans start at just a few hundred dollars, making it a good option if you don’t need a large loan.
The lender has a wide range of interest rates, but just about anyone can get approved for a loan based on the lender’s minimum credit score requirement.
And even if you end up with a triple-digit rate, you’re still getting a better deal than you would with a payday loan.
5. Jora Credit
Jora is only available in eight states, which means it’s out of the question for most consumers. But if you live in a state that the lender operates in, you may be able to qualify with a rock-bottom credit score.
The lender’s interest rates get a little close to payday loan territory, though. So you’ll want to make sure to check with other lenders as well to see if you can get a better deal than what this one offers.
If you need money fast, CashCentral can approve and fund your loan within 24 hours.
Make sure you apply for one of the lender’s installment loans, though—it also offers payday loans. And keep an eye on the interest rate, as it can get relatively high depending on your creditworthiness.
CashCentral only operates in nine states which are Alabama, California, Idaho, Missouri, New Mexico, Rhode Island, South Carolina, Utah and Wisconsin.
CashNetUSA operates in eight states. You’ll either have the option to take out a payday loan or a personal line of credit. In general, the personal line of credit is cheaper.
It also gives you the chance to borrow from it in the future if you ever need to. The lender has a wide range of APRs, so the better your credit is, the better the rate you’ll qualify for.
What to consider before getting a bad credit holiday loan
Based on Sullivan’s experience, it’s best to only use a bad credit loan if your situation is dire.
A high-interest loan might be justified for emergency health care, food, shelter, or a legal expense with dire consequences,” he says, “and even those reasons should be carefully evaluated.”
Try these options before taking out a holiday loan:
- Credit card. If you already have a credit card with room on it to spend, use it before applying for a holiday loan. While credit cards tend to charge high interest rates, they’re significantly lower than what you’ll get with most of these lenders.
- Family member or friend. It can be embarrassing to ask someone close to you for financial help. But with this type of loan, you can typically set it up with a low-interest rate or no interest at all. Just be sure you pay it back in full—and preferably early— to avoid hurting your relationship.
- Ask for help. While there aren’t many community organizations that offer holiday spending money, you may be able to get help with some of your necessary expenses like groceries, rent, and utilities. If you’re eligible, the assistance can free up some money to provide your family with a good holiday.
FAQ on Christmas Loans for Bad Credit
What is a Christmas loan?
A holiday loan is simply a personal loan issued by a financial institution, like an online lender, bank or credit union. While these loans are intended to cover holiday expenses, they are not the same as other short-term loans such as payday or cash advance loans.
How do holiday loans work?
Holiday loans are primarily taken in the form of an unsecured loan. This means you won’t have to provide any collateral for the loan. Lenders will check your credit to determine how much you can borrow and how much interest you’ll pay.
What does it take to qualify for the holiday loan?
Typical minimum requirements for a personal loan include being a U.S. citizen or permanent resident, being at least 18 years of age, and having a low debt-to-income ratio. Your credit score may also impact your ability to get a personal loan. While it’s possible to get a personal loan with a FICO score of 500 or above, the best loan rates and terms go to those with good or excellent credit.
Will applying for a holiday loan show on my credit report?
Yes. Every time you submit a formal loan application, it will appear on your credit report and may lower your credit score slightly.
What to consider before borrowing a holiday loan?
If you’re thinking about getting a holiday loan, it’s important that you have a plan to repay it before you apply. Some lenders — especially short-term lenders — charge exorbitant rates that can make repaying your loan next to impossible. Before you borrow, make sure you know how much you owe and if you can afford to make payments. Otherwise, you may risk default — which can mean more fees and a hit to your credit score.
The bottom line
Borrowing money should be your last resort for Christmas shopping. But if you’ve exhausted all of your other options, it’s important to know where you can go that won’t charge you as much as a payday loan.
Consider the lenders listed here, as well as other top personal loan companies.
You can even use SuperMoney’s loan engine to get pre-qualified with a soft credit check for multiple lenders at once. The more time and energy you put into finding the best loan option for you, the more you’ll save.
Ben Luthi is a personal finance writer and a credit cards expert who loves helping consumers and business owners make better financial decisions. His work has been featured in Time, MarketWatch, Yahoo! Finance, U.S. News & World Report, CNBC, Success Magazine, USA Today, The Huffington Post and many more.