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Broadly speaking, a personal loan is a loan from a bank or financial institution that is used for personal (not business or commercial) use. Personal loans may be unsecured, installment loans that can be used to fund necessary expenses or consolidate debts. Recipients of personal loans are often charged a lump sum, up front, fee known as an “origination fee” in exchange for the ability to repay over a period of time – usually over more than 1 year.
Installment Personal Loans vs. Payday loans
In general, payday loans are for a shorter duration than personal loans, have a higher interest rate, and are often paid back in a single, lump sum payment (often the next paycheck). In contrast, an installment loan is repaid over the course of many months and payments are evenly spread out over the term of the loan.
Best Personal Loans for Bad Credit
Personal loans can help you consolidate debt and fund major purchases without using credit cards. While it may be more difficult to get approved for a personal loan with a bad credit score (580 or below), there are multiple online lenders that may be able to help. However, borrowing will be expensive because lenders tend to charge higher rates when your credit scores are low.
We reviewed more than 50 lenders to find the best bad credit loans from lenders that typically offer competitive (although not necessarily low) interest rates and that are also more likely to approve you with bad credit. These lenders might suggest that you apply with a high credit score, but they also say they don’t have a hard minimum credit score requirement.
Based on our analysis, here are our picks for the lenders that offer the best personal loans for bad credit: