Are you in need of quick cash but don’t have the credit score to get it? Many wonder if they can even get a personal loan with a 520 credit score or worse.
One might think it’s possible with all the advertisements that promise “bad credit personal loans, guaranteed approval, no credit check” and “direct lenders for bad credit installment loans,” but are they are legit?
Here, we will get to the bottom of these “personal loans- guaranteed instant approval” offers and will reveal our top recommended lenders for those who can’t get approved anywhere else.
Guaranteed personal loan approval for bad credit
If you have bad credit and have been turned down when applying for personal loans, you are not completely out of luck. You will come across lenders that have “guaranteed personal loan approval for bad credit” offers.
While no offer is truly 100% guaranteed, many are pretty darn close. The difference between bad credit personal loan lenders and the rest are that bad credit lenders typically require collateral or have exorbitantly high fees and interest rates to cover their risk.
Where can you find these loans?
Auto title loans are short-term loans, secured by the clear title of a vehicle. The lender will appraise your vehicle and offer you a loan amount based on a percentage of the car’s value. For example, if your car is worth $2,000, they may cap you at borrowing 50%, or $1,000.
According to the Federal Trade Commission (FTC), lenders often charge 25% interest per month, which equates to a 300% APR, plus fees. The repayment terms can vary from a single payment within 30 days to multiple payments over a few months.
If you miss a payment, the lender can take possession of your car. Mike Arman, who works in the lending business, says, “If you are late and lose the car, you not only lose the car (which is worth far more than the loan amount), you also lose your mobility, which means you now can’t get to work in order to make any money either.”
Auto title loans can put your car at risk
These loans are only legal in select states and, in four out of five cases, they are not repaid on time. This leads to 20% of borrowers losing their cars and many others renewing the loan or borrowing from somewhere else. (source)
While most anyone with a valid car title can qualify and you are likely to get near instant approval, auto title loans do come with risks. You may lose your car and can dig yourself into a deeper hole due to the high cost and short repayment period.
The only time this may be worth it is if you need money immediately for an emergency or solid investment, and you have a chunk of money coming within the repayment period that will allow you to cover the costs in addition to your regular living expenses.
If you aren’t familiar, pawn shops are businesses that offer loans in exchange for personal property. They do not run credit checks. You simply bring in the item you would like to use as collateral, and the pawn shop will assess it’s resale potential.
The shop will decide if they will offer you a loan and, if so, how much the loan will be. You must be 18 and show proof of identity and, in some cases, they may ask for proof of ownership for an item.
Pawn shop loans typically have terms that last one to two months. Costs include interest rates that average 10% per month, along with fees for storage and insurance. If you don’t come back and pay for your item plus interest within the allotted period, the pawn shop will own your item and can sell it.
Anyone 18 years or older can bring an item into a pawn shop, but it’s not quite guaranteed approval because the pawn shop has to agree to offer a loan for your specific item. However, it won’t depend on your credit or financial profile.
While not competitive with unsecured personal loans regarding cost, pawn shop loans are often more affordable than payday or auto title loans. Further, you don’t have to put your car on the line.
Lastly, are Payday loan lenders. They will provide quick cash for people, sometimes without a credit check, as long as the borrowers can prove they have regular income from a job. You often have to show pay stubs to prove regular income and then have to repay the loan plus interest and fees on your next payday.
The average repayment period is a short 14 days, and average interest rates range from 12.5% to 33% which translates into an APR ranging from 300% to 800%.
If you can’t repay the loan in full, you can often roll it over which adds additional interest charges and fees. Many borrowers fall into this downward spiral of multiple loans with expensive costs that pile up.
While you can get near instant approval with proof of regular income, payday loans should be a very last resort. They are known for being predatory and cause the majority of borrowers to end up in a worse position than when they started.
Personal loans which almost guarantee instant approval
Now that you know the types of personal loans you can get with bad credit and the risks they present, here are the top lenders in this space.
Finova Financial is our pick for the best auto title lender. It offers equity lines of credit that cost 50% less than the current national average and has a 30% APR cap.
Further, it offers longer loan terms of 12 months, giving borrowers more time to repay the money owed. If you pay off your loan early, there is no prepayment fee.
You also earn points when you pay on-time, which can be used to postpone payments later without any penalties. Finova reports to one credit bureau, which can help or hurt your credit depending on how you manage the loan.
Easily apply online and get an answer right away.
Check Into Cash
Check Into Cash is one of the most well-known payday lenders and has over 900 brick-and-mortar locations in 23 states across the US. It provides payday loans in-store and online, and also offers auto title loans.
The pros are that the company is widely accessible and it provides access to cash fast. You can walk into a store location with qualifying proof of income and walk out with the loan. It also offers longer-term installment loans to online applicants that qualify.
The cons are that the fees are very high and the loan terms can be very short. Further, online, you have to undergo a credit check which can be limiting for some applicants.
The company itself warns that its loans should only be used to meet immediate, short-term cash needs. However, amongst all lenders, this is one you can count on to be reliable and easy to access.
LendUp is an exclusively online payday lender that earns an honorable mention amongst the rest. It calls itself a “socially responsible lender” and backs that up with its tier system that allows repeat customers to qualify for lower rates and higher loan amounts as they establish a positive repayment history.
The pros are the lender reports to the credit bureaus, so making your repayments can help to build your credit score. Further, if you do need to borrow repeatedly, you have the opportunity to earn better rates and terms.
The downside is that, initially, the cost will be high just like any other payday lender. Further, the application is solely online and does include a credit check, albeit, approval is more lenient than with standard personal loan lenders.
Bonus Tip: If your credit is not great, try Peerform. It’s a lending marketplace that considers borrowers with poor credit.
To discover more, click here.
How to find a guaranteed approval lender
When weeding through auto title and payday lenders, here are the key factors you should consider
Auto title lenders
Look out for the following:
- Loan amount: The minimum and maximum amounts that a lender will extend. Also, note the percentage of your car’s value that a lender offers.
- Vehicle requirements: Most lenders require a clear title and that the vehicle is paid off. However, there may be other requirements.
- Interest: The amount of interest the lender will charge you to borrow the money. It can be helpful to look at it in terms of the annual percentage rate (APR).
- Fees: The amount you will have to pay to borrow the money, in addition to the interest.
- Loan term: The amount of time you have to repay the loan (single payment vs. installment). A major pitfall is choosing a loan with too short of a repayment period.
- Non-payment options: The procedure if you can’t repay the loan, such as how long you have to make the payment before you lose your car, fees that apply, and options for a roll-over.
- Eligibility requirements: What you need to qualify, i.e., full coverage insurance, credit check, proof of address, etc.
- Time to funding: The time it takes to get the money after being approved.
When vetting payday lenders, consider the following.
- Loan amount: The amount you can borrow.
- Loan fees: Individual fees that are charged to borrow the money.
- Interest: The interest rate in terms of annual percentage rate (APR).
- Eligibility requirements: Requirements to get the loan such as minimum income amount, minimum credit score, no bankruptcy, etc.
- Repayment period: The length of time you will have to repay the loan.
- Time to funding: When you will get the money.
While similar to an auto title loan, payday lenders will be focused on your source and amount of income rather than your vehicle, as your paycheck will be the security for the loan. It’s crucial to shop around in order to find the best deal.
The truth about personal loans with guaranteed instant approval
As you can see, there is no such a thing as a personal loan with guaranteed instant approval as no lender is going to accept everyone. Even pawn shops, payday lenders, and auto title lenders have minimum requirements and standards.
However, they don’t rely strictly on credit, enabling you to get approved with a car title, an item of value, or a pay stub. If you are considering this type of loan, do so with caution and with a full understanding of the repercussions.
Want to learn how to build your credit and qualify for an unsecured personal loan with better terms? Check out these credit counseling firms that can help!
As you improve your credit, you can easily find out what rates you qualify for without hurting your credit score. Just answer a few simple questions and you’ll receive personalized loan offers from various lenders. Different personal loans come with different rates, fees and requirements, so check out what the best personal loans are to ensure that you choose the best option for you.
Jessica Walrack is a personal finance writer at SuperMoney, The Simple Dollar, Interest.com, Commonbond, Bankrate, NextAdvisor, Guardian, Personalloans.org and many others. She specializes in taking personal finance topics like loans, credit cards, and budgeting, and making them accessible and fun.