When you’re looking to take out a personal loan, you’ll find that the rates are quite a bit higher than those of home loans or car loans. This is because, unlike car or home loans, there is no property attached to the loan to help make it secure. When taking out a personal loan, all the bank has is your word that you will pay them back. Without collateral, banks are less inclined to make loans, causing the interest rates to be higher. In fact, if you decide to pursue a bad credit personal loan, you need to be prepared for less favorable terms. If your need is short term, online payday loans are also a great option with lower barriers.

In both cases, terms of agreement tend to be shorter. Personal loans are usually given terms that range from one to five years, in stark contrast to home mortgages often lasting up to thirty years. Online payday loans have term measured in days and weeks, not months or years.

You can certainly still find personal loans without high interest rates, as long as you are smart with your money. Your credit score is the most important part of financial standing when looking for a loan. If your credit is currently bad, you don’t need to give up hope. The bad credit personal loan is still an option


With a credit score over 730, you will most likely be able to borrow a very attractive interest rate. Currently that would be a rate of 7.95 percent for a short term unsecured loan.  Loans given for a longer period come at higher interest rates, around 8.25 percent. Without a high credit score, though,  you may still be able to find a low rate. If your credit score is a bit lower than 730, you should still be able to receive an interest rate of 8.2 percent for short term loans and 8.5 for long term.

Your score needn’t be perfect to find a decent interest rate. But once your credit score drops under 640, you’ll be hard pressed to find a decent rate. From credit scores of 600-639, your interest rates become 15.8% for the short term, and 16.1% for the long. How about under 600? Short term becomes around 21%. Online payday loans usually carry radically lower rates, but obviously with lower loans. So, keep your credit score at a decent level.


Also, another important part of getting a good rate is to shop around. Compare rates from different banks until you find the most attractive option. It’s also a good idea to have enough money saved up for one or two payments before taking out the loan, just in case.


By the way, be careful if you decide to use online payday loans. They can be a lifesaver in the short term, but do not, I repeat, DO NOT rely on them for the long term.

After taking out a loan, if you have improved your credit score considerably then you may be qualified for a reduced interest rate. Refinancing is an option. Banks are often willing to help people who are dedicated to improving their credit, so make sure you stay disciplined. You might even be able to lower your existing rate on a loan, but admittedly the difference at that point isn’t huge.

Your final option is to take out a secured loan. If you already own anything that can be used as collateral, for example jewelry, or a home.

It will be hard to get a good credit rate if you don’t currently have a high credit score, but it isn’t impossible. And there certainly are a few decent bad credit personal loan options out there. It just takes dedication and hard work. Really think about what you want and work towards that dream. And watch your finances constantly.