A lot of consumers have bad credit because they owe too much money. And because they have bad credit, the borrowing options available to them are costly.

Luckily, there are some companies out there willing to lend money, even to people with bad credit. We’ve put together a list of the ones offering the best terms on the market today, so that you can find the perfect loan that suits your needs.

If you want to read more generally about debt consolidation loans, what they’re good for, and how they might be able to help you, click here to drop down to the information section. Then later if you’ve decided that a debt consolidation is right for you, just scroll back up and choose the loan that best suits your needs.

Before we get into a list of these companies, we want to make a note: If you don’t meet their minimum requirements, some of these companies will direct your application to a payday loan company. If this happens to you, DO NOT take out a loan. Payday loans are NEVER worth it (we’ll talk more about payday loans below). But without further ado, here are some of the best ways to find personal loans if you have bad credit.

The 7 Best Debt Consolidation Loans for People with Bad Credit

The list we compiled consists of what we believe to be the seven best debt consolidation loans for people with bad credit. We’ve ranked them by scores based on a number of factors, including rates and fees, loan amounts, loan terms, funding time, and ratings by the Better Business Bureau.

The table below summarizes the seven lenders. Detailed descriptions follow.

 Loan AmountsInterest RatesLoan TermsOur Score
SignatureLoan.com$1,000 - $35,0005.99% - 35.99%3 to 72 months9.0/10
Avant $2,000 - $35,0009.95% - 35.99%24 to 60 months8.5/10
OneMain Financial $1,500 - $30,00016.05% - 35.99%24 to 60 months8.0/10
Peerform$4,000 - $35,0005.99% - 29.99%36 or 60 months7.5/10
LoansUnder36%$1,000 - $35,0005.99% - 35.99%2 to 72 months3.5/10
NetCredit$1,000 - $10,00034% to 155%6 to 60 months3.5/10
PersonalLoans.com$500 - $35,0005.99% - 35.99%3 to 72 months3.0/10

Signature Loan1. SignatureLoan

SignatureLoan isn’t a direct lender, but a website that enables you to connect with different lenders. They provide unsecured personal loans that can be used for virtually any purpose, including debt consolidation You can apply online, and the application process can be completed in just a few minutes.

Credit score range: From below 580 and up.
Loan amounts: $1,000 to $35,000
Interest rate range: 5.99% to 35.99%
Loan terms: Three months to 72 months.
Funding time: As early as the next day.
Payment frequency: Monthly or twice monthly.
Prepayment penalty: None.
Better Business Bureau rating: B- on as scale of A+ to F.

Avant 2. Avant

Avant is an online long platform that has provided more than $4 billion in loan funds to over 600,000 customers. Loans are actually administered through Utah-based WebBank, but Avant will be your point of contact.

Credit score range: 580 and above.
Loan amounts: $2,000 to $35,000.
Interest rate range: 9.95% to 35.99%.
Loan terms: 24 months to 60 months.
Funding time: Same day.
Payment frequency: Monthly.
Prepayment penalty: None.
Better Business Bureau rating: A+ on as scale of A+ to F.

One Main Financial3. OneMain Financial

OneMain Financial differs from other online lenders in that it also has brick-and-mortar operations. In fact, it has more than 1,700 branches in 44 states across the country. You can apply for a loan in minutes, and receive funding as early as the same day.

OneMain Financial works a bit differently than other online lenders, and this is due to the physical branches. You can complete a loan application online and get a quick decision. But once you do, you must visit one of their branches to have your information verified. The company has provided financing to over 10 million consumers.

Credit score range: No minimum, but typically 600 and above.
Loan amounts: $1,500 to $30,000.
Interest rate range: 16.05% to 35.99%
Loan terms: 24 months to 60 months.
Funding time: Same day.
Payment frequency: Monthly.
Prepayment penalty: None.
Better Business Bureau rating: A+ on as scale of A+ to F.

Peerform4. Peerform

Peerform is available in 42 states. What makes it different from other platforms on this list is that it’s a peer-to-peer lender. That means you apply for a loan on the site, and it will be funded by accredited high net worth individuals as well as institutional investors.

Credit score range: 600 and up.
Loan amounts: $4,000 to $35,000.
Interest rate range: 5.99% to 25.99%.
Loan terms: 36 months or 60 months.
Funding time: One week.
Payment frequency: Monthly.
Prepayment penalty: None.
Better Business Bureau rating: A- on as scale of A+ to F.

5. LoansUnder36

The LoansUnder36 name refers to interest rates under 36% (the maximum is 35.99%). LoansUnder36 is an online loan platform connecting consumers with more than 100 lenders. This creates the obvious advantage that you can apply for many different lenders through one application. They actually offer loans to borrowers at all credit levels, but have programs available for those with credit scores below 600.

Credit score range: 550 and higher.
Loan amounts: $1,000 to $35,000.
Interest rate range: 5.99% to 35.99%.
Loan terms: Two months to 72 months.
Funding time: As soon as the next day.
Payment frequency: Monthly.
Prepayment penalty: On some loans.
Better Business Bureau rating: Not rated.

Net Credit6. NetCredit

NetCredit has lower maximum loan amounts than other lenders on our list, but the platform is established specifically for consumers with bad credit. In fact, they don’t even have a minimum credit score requirement. It sits low on our list because interest rates can be prohibitive, even going into triple digits.

Credit score range: No minimum.
Loan amounts: $1,000 to $10,000.
Interest rate range: 34% to 155%.
Loan terms: 6 months to 60 months.
Funding time: As soon as the next business day.
Payment frequency: Monthly.
Prepayment penalty: Not indicated.
Better Business Bureau rating: A- on a scale of A+ to F.

Personal Loans7. PersonalLoans.com

PersonalLoans.com is another online loan aggregator. That is, they’re not a direct lender, but an online source for loans through many different lenders. And like the other lenders on this list, you can make application online in a matter of minutes.

Credit score range: Below 500 and up, but no recent bankruptcies.
Loan amounts: $500 to $35,000.
Interest rate range: 5.99% to 35.99%.
Loan terms: Three months to 72 months.
Funding time: As little as one business day.
Payment frequency: Monthly, but other options may be available depending on the specific lender.
Prepayment penalty: Not indicated.
Better Business Bureau rating: F on a scale of A+ to F.

How Debt Consolidation Loans Work

Debt consolidation loans work best when you have too much credit card debt. This is because not only do credit cards carry high interest rates, but they are revolving in nature. That means they’re extremely difficult to pay off, and even more so if you have several.

The test as to whether or not a debt consolidation loan will be in your best interest will be if the new payment on the debt consolidation loan will be lower than the total monthly payments you’re currently making.

In a perfect debt consolidation scenario, not only is your new monthly payment lower, but you also have a fixed payment and term. This means you will lock in your interest rate for the term of the loan, and also that the loan will be paid in full in a specific amount of time. For example, a debt consolidation loan with a term of three years will have you out of debt at the end of the term. Credit cards could keep you in debt for the rest of your life.

Applying for a debt consolidation loan when you have bad credit limits your options. You probably won’t be able to get a loan from a bank or credit union if your credit score is below 650. Some popular peer-to-peer lending sites, like Lending Club and Prosper, require a minimum score of 640. For that reason, you’ll have to go with lending sources that work specifically for people with bad credit.

The Debt Consolidation Credit Score Bounce

Often after doing a debt consolidation loan, your credit score goes up. That’s because you’ve paid off several loans, which typically improves your credit score. As long as you continue making payments on time on the debt consolidation loan, your credit score should rise steadily going forward.

Debt Consolidation Loan Requirements

Debt consolidation loans for people with bad credit work similar to those for people with good credit. The main difference is in the cost.

Interest rates. While many bad credit lenders advertise rates as low as 5.99%, you’ll more likely to see rates higher than 20% if you have a very low credit score. This will only make sense if the new interest rate is lower than the average interest rate on your current debt, or if your purpose is to do a consolidation to pay off your credit cards in just a few years.

Origination fees. These sometimes go by different names, but it represents a percentage of the loan you’re applying for. Typical of online personal loan lenders, you can be charged an origination fee equal to between 1% and 6% of the loan amount, based on your credit worthiness. The origination fee will typically be deducted from the proceeds of your loan. For example, if you take a $10,000 loan and there’s a 5% origination fee, the fee will be $500, and your net loan proceeds will be $9,500.

Debt payment method. Most debt consolidation lenders will issue payments directly to your current creditors. That will make sure each is included in the new loan. But be aware that there is usually a delay in the issuance of those payments. Find out exactly what it will be, and plan accordingly. If the payoff will be in two weeks, and one of your loans has a due date in three days, be sure to make that payment to avoid a late fee and a credit ding.

Prepayment penalties. Some lenders will charge a fee if you pay your loan early. In our list of lenders, we’ve intentionally avoided those that charge penalties. But since some of these loan sources work with multiple lenders, a penalty is a possibility.

Income qualification. It’s not possible to generalize how this works, due to the number of lenders. Some have minimum monthly income requirements, such as $1,000 or more. Others are based on debt-to-income ratio, but those ratios are often more generous than other lenders. For example, some lenders offering debt consolidation for people with bad credit will allow a debt ratio of up to 40%, not including your basic monthly house payment.

Alternatives to Debt Consolidation Loans

A debt consolidation loan isn’t always the answer to a problem of too much debt. If the numbers don’t work for you, or you can’t get approved, consider the following alternatives:

Get a loan from family. If you have a family member who has sufficient funds to cover your debts, it can be a way to get an interest-free loan. But if you go this route, make sure you pay the family member back as agreed. You could risk a relationship if you don’t.

Debt settlement. There are debt settlement companies that will work with your creditors to both settle your debts for less than the full amount owed, and at a reduced monthly payment. It’s like a soft bankruptcy. But be careful with this option. Not all the companies are reputable, and your credit can be ruined even if you successfully complete the program.

Bankruptcy. This enables you to legally discharge your debts. This is not a strategy that’s ever recommended lightly. But if you have more debt than you can reasonably repay, and your credit is already bad, bankruptcy needs to be an option.

Read more about how to get out of debt here.

Payday Loans – DO NOT TAKE THEM

Payday loans ruin lives. They can ruin yours.

Payday loans are loans for relatively small amounts (usually in the hundreds of dollars) that will be paid when the borrower receives his/her next pay check.

These loans carry a sky-high APR (the rate of interest you’ll be charged). For some perspective, a really good loan will have an APR of 4% (people can usually get these rates for student loans). A solid APR might go up to around 8%.

Legitimate loans for people with bad credit will generally go up to 40% APR.

Payday loans can reach up to 4,000%.

Type of LoanAPR (interest rate)
Student loan 4% - 12%
Personal loan, good credit8% - 12%
Personal loan, bad credit20% - 40%
Payday loanUp to 4,000%

If you find yourself in a really tight situation and you need money, Payday loans are not the right answer. Payday loans are NEVER the right answer.

At this point I want to mention something really nefarious that some of loan matching services do – including some on this list. If your personal financial situation is so extremely bad that they can’t find a lender to match with you, they might funnel your application to payday providers. Be extra careful that this isn’t happening to you.

Choosing the Right Debt Consolidation Lender

Your options will depend on a combination of your credit, income, and debt level. Naturally, the stronger you are in each of the three categories, the more options you’ll have. But if you’re on the lower end of the scale, it may be a matter of working with one of the small number of lenders who will approve your application.

Once again, be sure the debt consolidation makes sense from a financial standpoint. It should improve your situation, not put you in a worse one.

Finally, you’ll need to be disciplined in how you handle credit once your debt consolidation loan is approved. That means not taking on any new debt. The basic idea of a debt consolidation loan is to use it to pay off old debt. That effort will be completely pointless if you continue obtaining fresh credit.

Final Thoughts on The 7 Best Debt Consolidation Loans for People with Bad Credit

A debt consolidation loan can be just what you need to both lower your total monthly payment, get your debts paid off in just a few years, and improve your credit score in the process. You should emerge from a debt consolidation loan in a much better position than you started.

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