Small Loans for Bad Credit
Financing options are limited when you have bad credit. Traditional lenders often turn away hopeful borrowers with poor credit scores or limited credit histories. What do you do when your score isn't perfect, but you need to cover unexpected expenses, consolidate debt, or make a major purchase?
Fortunately, lenders like Advance America specialize in providing small loans to people with bad credit. Let's explore some common loan options for bad-credit borrowers and how you can get the money you need as soon as today.
What are small personal loans?
Typically, a small personal loan is any type of financing that allows you to borrow a few thousand dollars or less.
Unlike larger loans, such as a mortgage or auto loan, small personal loans typically have shorter repayment terms. This means that borrowers will need to pay back the loan within a shorter period of time. And while the interest rates on small loans for bad credit may be higher than those offered by traditional lenders, they provide an accessible financing option without the need for a perfect credit score or extensive credit history.
What can I do with a small personal loan?
Borrowers often use smaller loans to cover unexpected expenses or to finance large purchases. For instance, you might use a personal loan to cover:
Small loans from non-conventional lenders are useful for people with bad credit because they have less strict credit requirements. As such, the right loan can provide the funds needed to address unforeseen circumstances without the hassle of applying through a traditional lender, which typically has a minimum credit score or income threshold requirement.
What types of small loans can I get with bad credit?
Loan availability may vary by lender and your state of residency, but generally, applicants with bad credit might consider one of the following financing options:
An installment loan is a type of personal loan where you receive a lump sum upfront. You then repay the loan in regular monthly payments, or installments, over a predetermined period. Installment loans are designed to help borrowers cover unexpected expenses or consolidate debt, even if they have a bad credit score.
One of the benefits of an installment loan is that you'll enjoy a predictable repayment plan. Having a fixed monthly payment makes it easier to budget and manage your finances, giving you peace of mind knowing exactly when and how much to pay each month.
Pawn shop loans
A pawn shop loan is a type of secured financing where you exchange a valuable item, such as jewelry or electronics, for a no-credit-check loan.
The biggest advantage of a pawn shop loan is that practically anyone can get one with the right collateral. This means that even if you have a poor credit history, you can still qualify for this type of loan as long as the pawn shop staff considers your item valuable enough to use as collateral.
But there are some drawbacks. For starters, there's no way to predict how much money the pawn shop might offer. You also risk losing the items you pawned if you fail to repay the loan.
Payday loans are designed to bridge the gap between paydays and provide immediate financial relief. This type of short-term loan can be a viable option for borrowers with bad credit who need quick access to funds.
One of the main advantages of applying for a payday loan is that the lender considers your income and employment history instead of basing the approval decision entirely on a credit check. Even if you have a poor credit history or no credit at all, you may still qualify for a payday loan as long as you meet the lender's minimum requirements. This makes payday loans a highly accessible and popular option for borrowers who have been declined by traditional lenders.
Before taking out a payday loan, it's important to note that this type of loan must be repaid in full on your next pay date. Failing to pay off the loan on time can result in additional fees and interest charges.
Similar to pawn shop loans, a title loan uses your car's value as collateral to secure financing. But rather than handing over your car, you give the lender your title. This allows you to keep driving while you repay your loan.
Since the amount you can borrow is based on your vehicle's equity and not your credit history, title loans can be a good option when you need a larger amount of money. To qualify for a title loan, you must own your vehicle outright and have a clear title in hand. It's also important to remember that the lender can seize your vehicle if you default. You'll need to properly budget your repayments and only borrow an amount you can afford to repay so you don't lose your means of transportation.
Credit card cash advances
If you already have a credit card that allows you to borrow against your credit limit, you might consider a credit card cash advance. Unlike a payday loan, this type of cash advance essentially turns your credit card into a short-term loan.
One advantage of getting a credit card cash advance is that you typically don't need to go through a credit check again because the lender has already checked your creditworthiness and issued you the card. You're simply borrowing from your pre-approved own credit line.
The downside? You'll need to already have a credit card with available credit and the option for a cash advance. You'll also be borrowing money at the card's cash advance rate, which is often higher than the regular APR (and typically includes extra fees).
Lines of credit
Another loan option you might consider is a personal line of credit. A line of credit is a type of loan that allows you to borrow funds up to a predetermined limit.
Unlike a traditional loan where you receive a lump sum upfront, a line of credit gives you access to a revolving credit line that you can draw from as needed. This means that you can borrow smaller amounts of money whenever you need it, rather than taking out a large loan all at once.
One of the biggest advantages of a line of credit is its flexibility. Not only do you have the freedom to access funds as your financial situation requires, but you only pay interest on the amount borrowed.
What do I need to qualify for a small loan from Advance America?
If you have bad credit and need a small loan, Advance America may be able to help. We understand that your credit score doesn't always reflect your current financial situation, which is why we offer financing options tailored to individuals with less-than-perfect credit histories.
To qualify for an installment loan, payday loan, or line of credit from Advance America, there are a few things you'll need:
- Government-issued ID
- Proof of income
- Checking account
- Social Security Number or ITIN (in-store only)
Since we typically deposit funds directly into your bank account and collect payments via automatic withdrawals, you'll also need an active checking account.
Pros and cons of getting a small loan with bad credit
While a small loan with bad credit can be a helpful financial tool when used responsibly, it's important to weigh the pros and cons before applying.
Pro: Applying won't impact your FICO credit score
Many small-loan lenders, including Advance America, may not pull credit from the big three credit bureaus, so applying may be less likely to negatively impact your FICO credit score. This is certainly a plus if you've been working to establish or rebuild your credit.
Pro: Get the money you need to cover expenses
With Advance America, you can get the money you need to manage your financial situation. Whether you're dealing with an emergency expense or simply trying to make it to payday, a small loan can help.
Pro: Repay in one lump sum or over time
Depending on which loan products are available in your area, you may be able to choose whether you want to repay your loan all at once or in monthly installments based on what works best for you.
Con: Interest rates and fees
You'll pay interest and loan origination fees with any type of financing, but your rates will likely be higher through a no-credit-check lender.
Con: You still need to budget
Creating a budget (and sticking to it!) is good practice whether you're borrowing money or not. Budgeting will help you get an overview of how much money you're bringing in, where it's going, and where you can cut costs.
Apply for a small personal loan from Advance America
Small loans for bad credit can be a helpful financial tool, but it's important to compare your options before applying. Consider the different types of loans available, their interest rates and terms, and whether you can afford to repay the loan on time.
If you need a quick and easy way to borrow money with bad credit, Advance America can help! Apply for a small personal loan and get the money you need today.