5 Best Direct Lenders For Bad Credit Loans 2023

Having bad credit can make it challenging to get approved for a personal loan from traditional banks and credit unions. Luckily, there are online direct lenders that specialize in bad credit loans. They offer quick access to financing without requiring good credit, collateral, or endless paperwork.

In this guide, we will review the top 5 direct lenders for bad credit personal loans in 2023. We will cover their loan products, terms, eligibility criteria, the application process, customer reviews and more.

Our Top Direct Lenders for Bad Credit Loans Picks

Heart Paydays - Best for Fast Approval
Big Buck Loans - Best for Maximum Loan Amount
Fund Finance - Best for Fair Credit Applicants
Green Dollar loans - Best for Bad Credit and Self-Employed
Viva Payday Loans - Best for Bad Credit and Low Income

What is a Bad Credit Personal Loan?

A bad credit personal loan is an unsecured loan designed for borrowers with poor credit scores typically below 620. They are unsecured, which means no collateral is required for approval.

Since traditional lenders view bad credit applicants as high risk, they either deny them or offer very high interest rates. Direct lenders cater specifically to this demographic by providing affordable loan options despite bad credit.

Uses for Bad Credit Loans

Bad credit personal loans allow borrowers to access fast financing for almost any purpose including:

- Debt consolidation - Combine high interest credit cards or payday loans into one monthly payment

- Emergency expenses - Unexpected medical bills, home repairs, car breakdowns

- Major purchases - Fund a vacation, wedding, or other big ticket purchase

- Life events - Relocation, adoption expenses, etc.

- Everyday costs - Monthly bills, groceries, gas, etc.

Basically, the loan proceeds can be used flexibly for any legal purpose without limitation by the lender. This gives borrowers complete control over the funds.

Benefits of Bad Credit Loans

Some key benefits of getting a personal loan with bad credit are:

- Access to financing despite poor credit history

- Fixed monthly payments that help build credit

- Lower interest than credit cards or payday loans

- Fast approvals and funding in as little as 1 business day

- No collateral required so no risk of repossession

By repaying these loans responsibly, you can start rebuilding and improving your credit score over time. This expands your access to even better loan terms in the future.

Factors that Determine Loan Eligibility & Terms

When applying for a bad credit personal loan, here are the main factors that lenders consider to determine your eligibility and loan cost:

- Credit score - The lower it is, the higher the interest rate. Many lenders impose minimum requirements between 500 to 600.

- Debt-to-income ratio - Assessing your income versus existing debt obligations. Expect max approval limits around 30% to 50% DTI.

- Employment and income - Having a steady job and sufficient income to repay the loan. Minimum requirements range from $800 to $2000 monthly.

- Loan purpose - Lower risk purposes like debt consolidation may qualify for better terms versus high risk purposes like business funding.

- Repayment history - Applicants with a history of timely repayments tend to appear less risky to lenders.

By optimizing these parameters before applying, you can qualify for the maximum loan amount and lowest interest rate possible. Now let's review the top 5 direct lenders.

1. Heart Paydays - Best for Fast Approval

Heart Paydays stands out for offering near instant approval decisions and funding as fast as the next business day. Here are the key highlights:

Overview

- Founded in 2018

- Loan amounts from $100 to $5000

- Term lengths of 3 to 24 months

- Competitive APRs from 5.99% to 35.99%

- No origination fees

- Application form takes 2 minutes

Eligibility Criteria

- Minimum credit score of 500

- Minimum monthly income of $800

- Available in all states except New York and Connecticut

Application Process

Complete simple online form with basic personal details
Get approved in minutes with no impact to credit score
Review loan offer and e-sign if satisfactory
Funds deposited as soon as next business day

The quick online process with near instant decision makes Heart Paydays ideal when you need emergency cash fast.

Advantages

- Fastest funding times as little as 24 hours

- Low minimum credit score and income requirements

- Easy 5-minute application with instant decision

- Funds can be used for any purpose

- Competitive interest rates based on eligibility

Disadvantages

- Maximum loan amount of $5000

- Origination fee varies by state

- Late payment fee of $15 to $30

Heart Paydays is a reputable direct lender with excellent customer reviews. They make the bad credit loan process incredibly fast and easy. Apply if you need emergency cash within 24 hours.

2. Big Buck Loans - Best for Maximum Loan Amount

Big Buck Loans is an experienced direct lender offering high approval limits for bad credit borrowers - up to $35,000.

Overview

- Founded in 2007

- Loan amounts from $500 to $35,000

- Term lengths of 6 to 60 months

- APRs from 5.99% to 35.99%

- No prepayment penalties

- Loans are unsecured up to $5000

Eligibility Criteria

- Minimum credit score of 550

- Minimum monthly income of $1250

- Must be employed for at least 3 months

Application Process

5 minute online form
Instant decision and loan offer
Accept offer and provide documentation
Receive funds in 24 to 48 hours

Big Buck Loans stands out for offering the highest loan amounts in this niche – up to $35,000 for eligible applicants.

Advantages

- Up to $35,000 loan amount

- Flexible terms from 6 to 60 months

- Quick funding in as little as 1 business day

- Simple eligibility and application process

- Funds can be used for any legal purpose

Disadvantages

- Requires proof of income for loan approval

- Origination fee up to 6% of loan amount

- Late fees up to $30

If you need more than $5000 and have sufficient income, Big Buck Loans is likely your best option. Their high approval limits and great customer service make them a top choice.

3. Fund Finance - Best for Fair Credit Applicants

Fund Finance caters to a wider credit spectrum, offering bad credit loans even to applicants with fair credit scores above 640.

Overview

- Founded in 2010

- Loan amounts from $500 to $40,000

- Terms of 6 to 72 months

- APRs from 3.99% to 29.99%

- No application or origination fees

- Free credit check does not affect score

Eligibility Criteria

- Minimum credit score of 580

- Minimum monthly income of $1400

- Receive loan decision in minutes

Application Process

Answer questions to check loan eligibility
Complete application online or over the phone
Get approved decision within minutes
Verify income and identity
E-sign loan agreement
Receive funds via direct deposit

Fund Finance is one of the few lenders willing to work with fair credit applicants - a huge advantage.

Advantages

- Minimum credit score of just 580

- Large maximum loan amount of $40,000

- Lengthy repayment terms up to 72 months

- No application or origination fees

- Quick loan decision and funding

Disadvantages

- Income documentation required

- Limited to 23 states currently

- Max interest rate still high at 29.99%

If your credit score is at least 580, Fund Finance gives you a strong chance of approval on excellent terms. Their customer service and responsible lending make them a trusted choice.

4. Green Dollar Loans - Best for Bad Credit and Self-Employed

Green Dollar Loans specialize in approving borrowers with bad credit while also catering to the self-employed.

Overview

- Founded in 2006

- Loan amounts from $500 to $25,000

- Term lengths of 6 to 48 months

- APRs from 5.99% to 35.99%

- No prepayment fees

- Funds as fast as the next day

Eligibility Criteria

- Minimum credit score of 550

- Minimum monthly income of $1200

- At least 1 year self-employment OR 3 months employment

- Applications are approved up to $15,000 with no proof of income for the self-employed

Application Process

5 minute secure online form
Get approved in minutes with no obligation
Review offer and accept if satisfactory
Provide income verification if employed
Sign loan agreement digitally
Loan deposited directly within 24 hours

Green Dollar Loans makes financing accessible for bad credit borrowers who are self-employed or have non-traditional income sources.

Advantages

- Minimum credit score of just 550

- Maximum loan amount up to $25,000

- No income verification required for self-employed

- Offers installment loans and lines of credit

- Quick access to funds within 24 hours

Disadvantages

- Max interest rate of 35.99%

- Late fees and returned payment fees

- Available in only 22 states currently

Green Dollar Loans is the top choice if you have bad credit and need a loan approved based on your ability to repay rather than income documents. Their flexibility offers a lifeline to the self-employed.

5. Viva Payday Loans - Best for Bad Credit and Low Income

Viva Payday Loans approves bad credit borrowers earning as little as $800 per month. They provide access to emergency cash when funds are tight.

Overview

- Founded in 2018

- Loan amounts from $100 to $5000

- Term lengths of 3 to 24 months

- APRs from 5.99% to 35.99%

- No prepayment penalties

- Origination fees from 0% to 5% based on state laws

Eligibility Criteria

- Minimum credit score of 550

- Minimum monthly income of just $800

- Must have steady employment

- Quick eligibility check does not affect credit score

Application Process

Answer questions to confirm eligibility
Complete online application in minutes
Get approved decision WITHOUT credit check
Accept loan offer if satisfactory
Verify income and identity
E-sign loan agreement
Funds deposited as soon as the next business day

Viva Payday Loans makes emergency loans accessible even if you have bad credit and low income.

Advantages

- Minimum monthly income of only $800

- Maximum loan amount up to $5000

- No hard credit check for initial approval

- Fast funding as soon as next business day

- Great for building credit history

Disadvantages

- Requires steady employment

- Max interest rate of 35.99%

- Late payment fees

- Origination fee up to 5% of loan amount

Viva Payday Loans provides a crucial financial lifeline for borrowers with bad credit and limited income. If you earn at least $800 monthly, they offer a great chance for loan approval.

Choosing the Best Lender for You

With this overview of the top direct lenders for bad credit loans, how do you decide which one is right for you? Here are some key questions to ask yourself:

- How much money do I need to borrow? Lenders have minimum and maximum loan amounts.

- How soon do I need the funds? Lenders vary in terms of approval and funding speed.

- What is my current credit score? Each lender has minimum score requirements.

- What is my monthly income? There are income thresholds for loan approval.

- Am I employed or self-employed? Some lenders cater specifically to self-employed.

- Are they available to borrowers in my state? Lending regulations differ by state.

- Do I value fast approval or low rates more? Fast approvals often mean higher rates.

Once you consider these factors, you can narrow down the most suitable lender for your circumstances. Pre-qualifying and comparing loan offers before applying is recommended.

Maximize Your Chances of Loan Approval

Here are some tips that can help maximize your chances of successfully getting approved for a bad credit personal loan:

- Check your credit reports and fix any errors to boost your scores

- Pay down existing debt balances and avoid new credit inquiries before applying

- Build credit mix by adding new types of credit like secured cards or credit builder loans

- Ask a family member with good credit to co-sign the loan application with you

- Provide proof of steady income such as recent paystubs

- Choose shorter loan repayment terms which appear more affordable

- Take out a secured loan and make payments on time to demonstrate responsible behavior

- Apply for a lower loan amount initially and request higher amounts after establishing repayment history

Even a small temporary boost in your credit score, debt-to-income ratio, or down payment amount can result in loan approval and better terms. Consider options to optimize these before applying.

Alternatives to High Interest Bad Credit Loans

If you are concerned about the higher interest rates of bad credit loans, consider these alternatives:

Secured Loans

These require an asset like a vehicle or savings account as collateral which is seized if you default. This lowers lender risk so they offer lower rates.

Credit Builder Loans

A portion of the loan amount is placed into a locked savings account monthly. Making payments raises your score so you can refinance at lower rates.

Co-signer with Good Credit

Adding a co-signer with good credit history significantly improves your chances of approval and lower rates.

Debt Management Programs

Credit counseling agencies can negotiate lower interest rates on credit cards and other debts to help improve your DTI.

Peer to Peer Lending

Online P2P platforms match borrowers directly with individual investors who provide funds at lower interest than traditional loans.

401(k) or Pension Loans

If eligible, borrowing from your retirement savings allows access to funds at minimal interest which won't affect your credit.

While bad credit loans are certainly an option for urgent financing needs, they should be seen as a temporary bridge to improve your finances until you qualify for lower cost borrowing options.

Pros and Cons of Bad Credit Loans

Before getting a personal loan with poor credit, consider these pros and cons:

Pros

- Fast approvals and funding, often in as little as 1 day

- Fixed monthly payments help build positive payment history

- More affordable than payday loans or credit cards

- Can be used flexibly for any legal purpose

- Available completely online with minimal paperwork

- Help establish relationships with direct lenders to access better loan options over time

- Provide access to financing when traditional lenders will not approve you

Cons

- Very high interest rates, often exceeding 20% APR

- Lower maximum loan amounts, usually under $25,000

- Risk of sinking deeper into debt if not repaid on time

- Late fees and penalties can be expensive if payments are missed

- Difficult to refinance to lower rates with existing bad credit

- Can take months or years to rebuild credit after taking out loan

- Unsecured so no collateral backing the loan

Bad credit loans allow access to immediate funds when facing financial hardship due to poor credit. But they can be very costly over the long run and don't address underlying issues. Avoid becoming dependent on them if possible.

Improving Credit After a Bad Credit Loan

The key to improving your credit after taking out a bad credit loan is to make sure you repay it responsibly. Follow these tips:

- Make at least the minimum payment on time every month

- Set up auto-pay through the lender to avoid missed payments

- Pay more than the minimum when possible to pay off the debt faster

- Avoid maxing out or overusing the available credit

- Limit new credit applications before loan is fully repaid

- Monitor your credit reports and dispute any errors

- After 6 months of on-time payments, request credit limit increase from issuer

- After 12 months, apply to refinance the loan to lower interest rate

If you stick to your payment schedule and use credit minimally during the loan term, your credit score can start improving in as little as 6 months.

Signs It's Time for a Bad Credit Loan

Here are some scenarios where a bad credit personal loan may make sense:

- Facing an urgent, unexpected expense that exceeds your savings

- Want to consolidate high interest rate debts to lower monthly payments

- Opportunity to make a major purchase that will improve your life or earning potential

- Have multiple debts coming due and need assistance avoiding default or bankruptcy

- Want to establish a positive credit history and access to more affordable lending options

- Have an urgent need but do not want to burden friends or family by borrowing money

Just be sure to only borrow what you can realistically afford to repay on time. Avoid payday lenders charging exorbitant rates. Reputable direct lenders provide more affordable loan access despite bad credit.

Is a Bad Credit Loan Right for You?

Here are some signs getting a personal loan with bad credit may NOT be the right option:

- You have no stable income source to afford payments

- Existing monthly debts already exceed 50% of your income

- Your credit score is below 500 making approval unlikely

- You need more than $25,000 which exceeds maximum loan amount

- You have applied for credit extensively in last 12 months

- You plan to use the funds for a risky investment or business venture

- You expect your income may decline soon and cannot make payments

- You have no clear plan for improving your credit and finances

- You do not understand loan terms or have financial literacy

These situations indicate there is significant risk of sinking deeper into unmanageable debt. Improving your budgeting and credit or speaking to a non-profit credit counselor may be wiser initial steps.

How this Guide Can Help You

Our guide has provided extensive information on how to evaluate direct lenders for bad credit loans. Here are the key takeaways:

- Bad credit loans allow you to access emergency funds despite low credit scores – but come at very high costs.

- Every lender has minimum eligibility standards for loan approval that you should review before applying.

- Comparing loan offers from multiple direct lenders can help you find the best possible rate for your situation.

- Improving your credit score and monthly cash flow before applying gives you the best chance of approval on fair terms.

- Repaying bad credit loans responsibly helps rebuild your credit.

Disclaimer: The above is a sponsored post, the views expressed are those of the sponsor/author and do not represent the stand and views of Outlook Editorial.