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Best Loans For Bad Credit Borrowers (Editor's Choice)

Having bad credit doesn’t mean you have to have bad luck when applying for credit loans. The top loans for bad credit borrowers include title, payday, cash advance, installment, and credit builder loans.

Installment Loans Title Loans Payday Loans Cash Advance Loans Credit-Builder Loans
Credit Required? Yes No No Yes Yes
Average Loan Amounts $300 - $3,000 $200 - $25,000 $100 - $1,000 $100 - $1,000 $300 - $1,000
Income Required? Yes Yes Yes Yes Yes
Collateral Required? No Yes No No No

Let’s take a closer look at these loans, how they work, and how they may benefit specific borrowers.

1. Installment Loans

Installment loans give the borrower a set amount of money all at once. The borrower then has to repay the loan in installments or a set number of payments. Borrowers can determine how much they need before requesting the loan.

How Installment Loans Work

Lenders and borrowers work together to determine the terms of an installment loan. For example, if there is a 36-month loan for a car, a borrower has three years to pay it off in monthly installments.

There are several different types of installment loans, but they all follow the same essential monthly installment plan with varying interest rates.

Some examples are car loans, usually paid off over 12 to 96 months, and home mortgages, which are usually paid off over 15 or 30 years. Not all installment loans require collateral (such as Simple Fast Online's online installment loan product), and each has varying interest rates.

For auto loans, for example, more extended installment plans mean higher interest rates. Installment loans tend to have the highest interest rates in the installment loan family. In contrast, mortgages have the advantage of fixed interest rates that do not change over time (unless you want them to as part of a refinance).


  • Small payments over time can cover large expenses
  • Borrowers have a say in repayment terms
  • Installments usually stay the same throughout the loan
  • Some loan terms allow borrowers to pay the loan off early to end interest rates
  • Helps build credit

2. Title Loans

Title loans are short-term, car title, or auto title loans. A borrower’s vehicle is used as collateral for this loan, and the borrower must own the car outright. Vehicles can be automobiles, trucks, or motorcycles.

Typically, with title loans, borrowers are lent a small amount of money for what is typically a short amount of time.

Borrowers must present lenders with loan applications and show them a car, its title, and photo identification. Generally, title loans will not impact your credit score.

How Title Loans Work

Borrowers give the title to their vehicle in return for a loan. They often also pay lenders a fee for the loan. Borrowers most commonly must repay the loan in about a month.

Title loans are often obtained quickly, typically within a day. Loans can range from several hundred to thousands of dollars. Most title loan terms can amount to up to half the vehicle’s value.

Interest rates vary on title loans; some lenders charge, for example, 10% interest on 30-day loans. Some interest rates can also be "annualized," which means that a short-term rate is turned into an annual rate.

If you cannot pay your lender after the period of your loan, they may tack on another 30 days to the loan, and borrowers will pay another monthly fee. Such “rollover” can happen several times.

If you can't repay your loan, the lender may take your car back, meaning it becomes theirs.

For those who struggle to set a budget or plan to pay off their loans, title loans may be challenging to manage.


  • Can be obtained quickly
  • Borrowers keep their vehicles
  • Has few requirements
  • Borrowers do not have to have good credit

3. Payday Loans

Similar to title loans but without the car, payday loans involve borrowers obtaining small amounts of money with the agreement that the loan will be repaid to the lender after the borrower receives their next paycheck.

Payday loans are short-term loans. A portion of the borrower’s next paycheck is collateral for immediate credit. Payday loans are also known as cash advance loans or check advance loans.

Commonly, $500 is the limit for payday loans, and many loans are for less than $500.

How Payday Loans Work

Payday loans are typically based on the borrower's income, and borrowers typically provide lenders with a copy of a pay stub for reference.

Payday loans, like title loans, can be obtained quickly online or at a payday loan company.

Borrowers often must provide a lender with employer pay stubs showing income. From your pay stub, lenders base their principal on a percentage of the borrower’s short-term income.

Sometimes, collateral is a borrower’s wages. For example, a lender receives a check from a borrower, and the borrower receives cash.

Lenders also charge a fee for these loans, and on the borrower’s next payday, the lender is paid back in cash for the amount borrowed and the fee. Payday loans are helpful in situations where you need a relatively small amount of cash to hold you over between paychecks.

Selling Points

  • A relatively low amount of money exchanged
  • Lenders don’t often perform credit checks
  • Easy to apply for and quick to receive
  • Helpful for unexpected circumstances
  • Some states limit the interest rate percentage and regulate payday loans

4. Cash Advance Loans

Cash advance loans are short-term loans that are similar to payday loans. The borrower gets cash from their credit card balance. Credit card companies often offer them to their customers.

How Cash Advance Loans Work

Banks or alternative lenders issue cash advance loans, including payday loans and merchant cash advances.

The most common type is the credit card cash advance, which borrows money from an existing credit line. The money can come from checks cashed at a bank or deposited at or withdrawn from an ATM.

Borrowers must provide proof of income and personal identification when applying.

As usual, fees and interest rates are included, and lenders expect these loans to be paid within a set time period.


  • Easy to obtain
  • Easy to manage
  • Uses existing credit card account
  • A credit score is not impacted by taking out cash advance loans
  • Suitable for those with responsible payback plans

5. Credit Builder Loans

Is your credit score low or nonexistent? If so, this one is for you.

Credit builder loans are made to help people who don't have a credit history or don't have a long enough credit history to buy big things. Obtaining a good credit score with help from a credit builder loan may make it easier.

How Credit Builder Loans Work

These loans work very differently than other common loans. Smaller organizations, including community banks and credit unions, often manage credit builder loans.

Borrowers apply for a loan, and if approved, the borrowed amount is put into a bank account, such as a CD or savings account, as payments are made. Lenders report payments to credit bureaus so that the borrower can get a better credit score.

Borrowers typically cannot access the loan, which ranges from a few hundred dollars to about $1,000, until it is fully repaid. When the loan is paid off, borrowers get the deposited money.

Credit builder loans come with a range of fees for borrowers to keep in mind, including administrative fees. Furthermore, lenders also charge interest, typically ranging from 5% to 15%.


  • Loans can be secured with little or no credit
  • No property collateral
  • You can choose a trusted financial institution to work with
  • Secure savings option

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