Best Short Term Loans for Bad Credit

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Bad credit loans are for people with a poor credit score. Yes, you heard that right: even if you have bad credit, you can still get approved for financing.

Finding out you have a low score can feel like getting bad news from your doctor. But, that doesn’t mean you are out of options. Even with a credit score below 600, you can still receive approval from a trustworthy lender.


Things to Know about Short Term Loans for Bad Credit

Getting a short term loan for bad credit is a different experience from borrowing with good credit. At the end of the day, though, you’re still taking out a personal loan, so it’s important to understand what it is.

Here are three things to pay attention when considering the best short term loans for bad credit:

1. Type of Debt: When you take out a debt, you need to pay it back. Based on your agreement with the lender, you can either pay in regular installments, or you can pay back the entirety of the sum you borrowed at one time (also known as revolving debt).

2. Interest Rate: If you pay in regular monthly installments, the interest rate refers to the amount you pay each month.


3. Types: Your options are either secured or unsecured. Secured is backed by collateral, meaning if you fail to pay back the debt on time, the lender can claim ownership over the piece of collateral you staked. An unsecured has no collateral attached to the agreement.

The Effects of Bad Credit in Getting a Short Term Loan

If you have a poor credit score , you’re likely going to get a high interest rate. That’s just the way it goes and there are a few ways around it. Most lenders offer a wide range of interest rates, and they give the customers that seem the most dependable the lowest ones. A poor credit score ranking tells a lender that you might be less likely to repay your debt. To manage the risk of taking on a less reliable customer, lenders compensate by charging more to accept their business.

You can find the best short term loans for bad credit that offer either regular installment plans or revolving debt options. Different lenders have different preferences. Some might insist on regular installments for customers with a poor credit score so they can know early on whether the person is likely to default. Others might offer revolving debt, but they might only grant low total amounts, or they might charge extremely high interest rates.

A poor credit score rating might make it difficult to find an unsecured option. Even with a high interest rate, some lenders might not want to take on the risk of a customer not being able to pay the balance back. In that case, a secured product could be a good option for you, if you have a valuable piece of collateral that you’re willing to back the debt with.

If you have a poor credit rating and you’re in need of funds, it doesn’t necessarily mean that you don’t have valuable assets. You might have homes, cars, or other items that could fetch a high market price. By offering those items as collateral, you could get a secured option with a reasonable interest rate.

Tips to Get a Short Term Loan for Bad Credit

Knowledge is power. And it can also help you make sound decisions, especially when you’re working with the disadvantage of having a poor credit score.

- Find Out Your Credit Score

Before doing anything, you need to know your credit score. Best case scenario, it’s not as bad as you thought and you can get a personal debt with a reasonable interest rate and favorable terms.

But even if it’s bad, knowing what it is will help you negotiate with the lender. Even if it feels like your low credit score puts you at a disadvantage when it comes to negotiating the terms, imagine how much worse it would be if the lender knew your credit score and you didn’t.

You can find out your FICO score from websites like

- Think About How Much Risk You’re Willing to Take on

The lender isn’t the only one taking a risk by dealing with someone who has poor credit. The person taking on the debt is taking on a risk too—the risk of not being able to pay back the balance on time.

It’s important to think about an ideal, yet realistic, arrangement for you considering your poor-credit situation. Would you prefer to take on revolving debt or would you prefer to pay in regular installments? Does a secured or unsecured work better for you? What interest rate are you hoping to receive?

Your personal situation will determine what repayment arrangement works best for you. Have answers to all of these questions in mind before applying. You don’t want to sign on the dotted line too quickly before you’ve had a chance to think it through.

- Consider the Worst-case Scenario

What happens if you can’t make your payments? That’s not a question you want to start thinking about only after you’ve taken on the debt and realized you’re not going to be able to meet the terms and conditions you’ve already agreed to.

Before accepting an agreeement with a high interest rate, you also need to think about the never-ending fines and fees you’ll have to deal with if you can’t pay it back.

Before taking out a secured option backed by a valuable asset, think about whether you’d be able to handle not having it in your life. If you’re considering staking your house to a secured agreement so you can quit your day job and start your own business, maybe that’s not worth the risk. Don’t use anything as collateral that you’re not prepared to lose.

Where Should You Go to Get Short Term Loans for Bad Credit?

So you’ve done your homework. You know your credit score. You’ve thought about your financial situation and how much risk you can take on. Now where do you go to actually get a short term loan for bad credit?

First, a word of warning: Be cautious. There are a lot of predatory lenders out there that bait people with a poor credit score and a desperate need for cash into vicious agreements with obligations they could never meet.

Avoid payday products. They might seem appealing by offering you quick deals for cash, but the terms are unreasonable and you’ll likely find yourself spiraling into a world of mounting fees and increasing debt, making a bad situation much, much worse.

It’s important to be aware of the bad actors out there. You’re going to be vulnerable, but by doing your homework you can scope out the bad ones and find the best option for you.

- Explore Personal Installment Lenders

Personal installment lenders offer flexible terms depending on your need and financial status. Often used for anything from financing a wedding to paying for an expensive hospital visit, these lending arrangements can vary in terms of the amount of money exchanged and the timeframe for paying them back.

Since these have a variety of functions and agreements, the lenders consider many different factors when deciding on your repayment terms. A low credit score isn’t a deal breaker for these kinds of options.

- Consider What Collateral You Can Use for a Secured Option

No, you don’t want to use something as collateral that would be devastating and potentially harmful if you were to lose it. But secured options can still be a good option for those with poor credit score and an inescapable need for cash.

If you have valuable assets, you can use those to help drive down the interest rate you might receive. With a valuable asset, a lending company might treat you like someone with a much higher credit score.

- Become a Member of a Credit Union

Credit unions offer great rates…if you’re a member. While they do consider your credit health, there are other factors that determine how they accept new members. Your personal background might make you eligible for credit unions you’ve never considered. There are great options for members of the military or government employees.

Do some research online and see if there any that you might qualify for. If you can become a member, you’re likely to qualify with a much more reasonable interest rate than if you went to a bank or a more traditional lender.

- Co-sign with Someone Else

Interest rates are calculated based on the credit score of the recipient. If there are multiple signers, the interest rate is based on the average of the two. So if you can find someone with a strong credit score to sign up with you, you can drive down the interest rate you’re likely to receive.

It could be a difficult situation on a personal level, and you’ll want to make sure the co-signer is willing to accept the risk, but if you can find the right person lending institutions that once seemed out of reach might now be in play for you.

Final Piece of Advice on Getting Short Term Loans for Bad Credit

Even if you have bad credit, the good news is that there are still short term loan options available for you. But there’s more good news, as well: there are steps you can take to improve your credit score.

So if you’re not in a desperate need for cash, it might be worth it to wait to take one out and focus on improving your credit score first. Then, when your credit is in better shape, you can get a better option with a lower interest rate.

Pay off as much debt as you can and limit how much additional debt you take on. Make sure your credit card balances are low, and also make sure that you’re paying your bills on time. With a concerted effort, your score will improve over time.

Compare the Best Short Term Loans Offers for Bad Credit