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Bad Credit Loans

Bad credit loans are intended for people who have a less-than-perfect credit score or little to no credit history. Bad credit is defined as a person's history of failing to pay bills on time, as well as the likelihood that they will fail to pay bills on time in the future. A low credit score frequently manifests bad credit.

Because bad credit holders are considered riskier than other borrowers, people with bad credit struggle to borrow money, especially at competitive interest rates. That is why the market created "bad credit loans" to assist clients with low credit scores in making both ends meet.

Bad Credit Loans Can Come in Different Types

Bad credit loans are financing options offered to people with low credit scores of 669 or less. Here are a few examples of bad credit loans.

Secured Loans

Secured Loans

Mortgages, auto loans, home equity loans, and home equity lines of credit are a few examples of secured loans for bad credit. This type of loan is secured by collateral, a home or a car, that can be used as payment to the lender if you fail to repay the loan. If you need money to buy a car or a house, or if you want to repair or improve your home, a secured loan for bad credit is a good option.

Because they are backed by collateral, secured loans are usually the least expensive type of bad credit loan. Interest rates, fees, and loan terms for secured loans can vary greatly depending on the lender. Taking out a secured loan and making all of your payments on time may even improve your credit score, making it easier to obtain credit in the future.

Loans with a Guarantor

Loans with a Guarantor

Guarantor loans are intended for borrowers who have poor credit and few opportunities to obtain money. Guarantor loans allow you to borrow money with the help of a guarantor. A family member or friend 'guarantees' that they will pay off your debts if you are unable to make your payments. When applying for a guarantor loan, you must provide the same information as you would for any other credit application. A guarantor loan can be used for a variety of purposes, including car purchases, wedding expenses, and home improvements.

Personal Loans

Personal Loans

Personal loans for bad credit are a short-term financial solution for people who require funds but do not have a good credit score or credit history. Personal loans for people with bad credit have higher interest rates and shorter repayment terms. People use bad credit personal loans to pay off credit card debt or medical bills, buy a car, and make significant home repairs.

Bad Credit Payday Loans

Though various loans can be considered bad credit loans, payday loans are the most common because they are easy to obtain and do not require any hard credit checks. A bad credit payday loan is generally a short-term, unsecured loan of up to $2500 due on your next payday. Anyone over the age of 18 can apply for a payday loan.

Payday loans may be available through storefront payday lenders, traditional banks, credit unions, or online, depending on your state's laws. However, most borrowers prefer online lending because the process is much more straightforward and convenient, as it can be completed with a single click.

Bad credit payday loans are known by a variety of names, including cash advance loans, deferred deposit loans, check advance loans, and online payday loans, but they all perform the same function.

About Unsecured Bad Credit Payday Loans

An unsecured bad credit payday loan is one that does not require collateral. Rather than relying on a borrower's assets as security, lenders approve unsecured payday loans based on a borrower's monthly income, which should not be less than $1000

What is Collateral?

Collateral is an investment that a lender accepts as security for a loan. Collateral may take the form of real estate or other types of assets. In addition, it serves as a form of insurance for the lender. If the borrower fails to make loan payments, the lender can repossess and sell the collateral to recover his losses.

What Constitutes a Poor Credit Score?

A credit score is a three-digit number that indicates the probability that a client will pay back his loans. Credit scoring models are statistical analyses used by credit bureaus to determine borrowers’ creditworthiness.

The FICO score, developed by the Fair Isaac Company, is the most well-known credit scoring model. A credit score of less than 669 is considered fair or bad, according to the FICO Score range of 300 to 850. Lenders frequently refer to this group as "subprime," which denotes borrowers who may have difficulty repaying a loan.

VantageScore is another credit scoring system that includes credit history data to determine a borrower's likelihood of paying back a loan. VantageScores, like FICO scores, use a range of 300 to 850. A score between 601 to 660 on the VantageScore models is considered fair, while a score of 500 to 600 is deemed to be poor. Scores between 300 and 499 are extremely low.

Why Trust ShinyLoans?

Why Trust ShinyLoans?

Our mission at ShinyLoans is to motivate you to make better financial decisions. For many years, we've been working with a vast network of trustworthy lenders to help you find the best products for your needs. Our online lenders provide low-interest rates, simple user policies, same-day cash transfers, and other services that can help you in times of need, even if you have a bad credit history.

Before Borrowing a Bad Credit Loan

If you live paycheck to paycheck, it may be tough to repay the loan while still meeting your living costs, especially if your income has been lowered by the amount borrowed. However, if you are one of the 40% of Americans who cannot cover an unexpected expense, a payday loan for bad credit may seem like your only alternative.

If you intend to borrow a payday loan, make sure you are aware of the risks involved.

  • Contact your lender and discuss all the issues and make sure you understand the terms.
  • Create a repayment strategy so you can pay off the loan on time and avoid becoming exhausted by the additional expense.

If you realize what you're getting into and what you need to do to get out of it, you'll be able to repay your loan faster and lessen the effect of interest rates and extra costs.

Basic Requirements to Qualify for a
Personal Loan Online

Online payday lenders only require the borrower to meet the following terms in order to provide you with a bad credit payday loan:

  • Have a current checking account.
  • Display proof of income.
  • Provide proper identification.
  • Be a legal US resident.

How Bad Credit Loans Work

When assessing or paying back a payday loan, it's critical to figure out how it works and to be aware of your rights.

The process

The borrower

The lender

What is a Payday Loan Contract?

A payday loan contract is a document that the lender should send to the borrower before transferring the money. The borrower, in his turn, should carefully read and adhere to the terms stated in the agreement, sign it, and send it back to the lender.

The following must be included in a payday loan agreement:

  • Borrowed amount
  • Term of the agreement
  • Loan cancellation called a “Two-day cooling off period.”
  • Total borrowing cost
  • Interest rates per $100 borrowed
  • Total amount due
  • Payment due date
  • Borrower's signature

About Two-Day Cooling-off Period for Bad Credit Loans

About Two-Day Cooling-off Period for Bad Credit Loans

When the borrower signs the agreement, the lender must also provide a cancellation notice form called “Two-day cooling off period.” If the client wants to cancel the loan, he must fill out the form and send it back to the lender, along with the money, within two business days of receiving a copy of the agreement.

When the lender receives your cancellation notice, he should provide you with a receipt. The receipt indicates that the lender has accepted your loan cancellation. According to the agreement, the lender may not charge a fee for canceling a loan.

Interest Rates for Bad Credit Payday Loans

According to the Consumer Financial Protection Bureau, the interest rates of a bad credit loan ranges from $15 to $30 for every $100 borrowed. That equates to a 391 percent APR on a two-week loan. If the loan is not repaid in full on the first due date, a fee is assessed, and the cycle begins again.

About Military Lending Act (MLA)

The Military Lending Act (MLA) is federal legislation that provides protections for active-duty service members, such as interest rate caps on many loan products. It restricts the maximum interest rate that can be charged on many types of consumer loans, including bad credit payday loans, to 36 percent. Thus, high-cost bad credit payday loans are not permitted for service members and their dependents.

What Happens in Case of Default

Although you do not have to undergo a hard credit check to obtain a payday loan, this type of debt can have an impact on your credit score. If you do not repay a payday loan on time as agreed, the lender may hire a debt collector. These agencies provide information to credit bureaus. Accounts turned over to collection agencies can negatively impact your credit rating and remain on your credit report for six years.

Can You Improve Your Credit With Bad Credit Payday Loans?

Bad credit loans are not reported to the three major credit reporting companies, Equifax, Experian, and TransUnion, so they are unlikely to have an impact on your credit scores. However, making your payments on time and within the agreed-upon term can demonstrate that you have good credit habits. These habits are typically recorded in a lender's client history and can serve as an indication to the lender to lend you money again in the future. If you make all of your payments on time, the lender may even agree to lend you a personal loan, with which you can now improve your bad credit.

How to Avoid Debt Traps

That’s true, bad credit payday loans are a way to bridge the gap between paychecks or to assist with an unexpected expense. At the same time, the Consumer Financial Protection Bureau warns that they can become "debt traps" if you are unable to cover it on time.

As a result, it is strongly advised to contact the lender prior to the due date and inform them of the repayment difficulties. Lenders typically suggest a new strategy that can alleviate the borrower's financial burden, allowing him to pay off the debt and avoid falling into a debt cycle.l

What Can Bad Credit Loans Be Used For?

Payday loans are a reliable option for borrowers who need money but don't want to get into long-term debt. The majority of bad credit loan customers borrow money to cover regular living expenses such as utilities, car payments, mortgage payments, credit card payments, food, or rent. Borrowers also use payday loans to cover unexpected expenses or avoid overdraft fees. A bad credit payday loan is sometimes obtained to cover short-term vacations, minor medical bills, or small purchases.