Best Hardship Loans for Bad Credit in November 2024

• We analyzed popular personal loan lenders, using factors such as interest rates, loan amounts, funding time, fees, and customer experience, to see which hardship loans are best. Our research shows the overall best lenders are Upstart and OneMain. Both lenders don't have minimum credit score requirements (if you apply directly with them). You may also be able to get funding in as little as one business day via Upstart and you can add a cosigner to your loan if you work with OneMain. 

A hardship loan isn’t an official type of loan, but rather a loan intended to help you cope with or get through a bad time — surprise medical expenses, a car accident, losing a job, and other challenges might all be made a little more manageable with some extra money. But not all hardship loans are created equal.

Best hardship loans for bad credit

The best hardship loans for bad credit are personal loans that cater to borrowers with bad credit. This is because they have the lowest costs (relative to other options), the longest repayment periods, and the highest amounts available. 

Compare the annual percentage rate (APR) between loans to see which has the lowest cost. The APR accounts for the interest rate and upfront fees, like an origination fee. Note that you'll need to prequalify first, to get a sense of whether a lender might approve your application and the APR you might be offered once you apply. 

Prequalification won't hurt your credit and only takes a few minutes, but it's not an offer of credit. Once you prequalify, you can compare quotes to choose the best loan and lender. Note that when you formally apply, the lender will conduct a hard credit inquiry that may ding your score temporarily by a few points. 

Methodology

Credible evaluated the best lenders offering hardship loans for bad credit based on factors such as customer experience, minimum fixed rate, maximum loan amount, funding time, loan terms, fees, discounts, and whether cosigners are accepted. Credible’s team of experts gathered information from each lender’s website, customer service department, directly from our partners, and via email support. Each data point was verified by a third party to make sure it was accurate and up to date.

Learn more about how Credible rates lenders by exploring our Personal Loans Lender Rating Methodology.

What are hardship loans?

Hardship loans aren’t a particular financial product, but a variety of loan types that are often used by people facing financial hardship. Some don’t require a credit check, but those are usually the ones to be wary of.

Personal loan

When you have bad credit, you may not be able to qualify for the lowest interest rates available, but even a high-interest personal loan will have advantages over some other options.

Compared to cash advance apps, payday loans, and title loans, repayment periods on personal loans are often more manageable — they typically range up to seven years. And APRs tend to be much lower — topping out around 36%. And, unlike a title loan, most personal loans don’t require you to put your personal possessions up as collateral.

Personal loan lenders will check your credit, but there are a few that cater to borrowers with bad credit.

Payday loan

A payday loan is a small-amount, short-term loan that doesn’t usually require a credit check. Payday loans often have APRs in the triple digits because of the short repayment period and very high fees, relative to the loaned amount. For example, a payday loan that charges $15 for every $100 borrowed has an APR of nearly 400%.

Many states have regulated or outright prohibited payday loans, and research by the Consumer Financial Protection Bureau has found that payday loans often trap borrowers in a cycle of high-cost debt. For this reason, they’re best avoided.

Compare: Payday Loans vs Personal Loans

Payday alternative loan

A relatively low-APR option is a payday alternative loan (PAL). PALs are available from many federal credit unions, and are designed to be utilized instead of payday loans.

Amounts can range up to $2,000, and repayment terms can extend to 12 months. Since interest rates are capped at 28%, a PAL is often a wise choice for a small, short-term loan. Even if you aren’t yet a credit union member, some credit unions offer PALs to new members immediately after joining.

Related: How To Get a $2,000 Personal Loan

Cash advance app

Cash advance apps are similar to payday loans, in that they offer small loans (often less than $500) with the understanding that the amount plus fees will be repaid on your next payday.

While cash advance apps can get you money quickly, you’ll typically pay an expedited funds fee for the convenience, which can rapidly inflate costs — for example, a $500 cash advance due in two weeks with a $20 expedited funds fee equates to a 104% APR. 

Leaving optional tips, though thoughtful, are another way to send cash advance APRs into the triple digits.

Compare: Payday Loans vs. Cash Advances

Title loan

A car title loan is a short-term loan, usually due in 30 days, for a small amount where you give the lender your car’s title as collateral — if you default on the loan, the lender can take your vehicle.

Fees on these loans can be as much as 25% of the total loan amount per month. That might not sound like much, but it’s the same as paying a nearly 300% APR. The lender may charge additional fees to roll over the loan from month to month if you can’t pay it off, making the cost of borrowing even higher.

Retirement loan

Some 401(k) plan providers let you borrow against your own retirement account. Loans are usually limited to 50% of your vested account balance or $50,000, whichever is less. And you typically have five years to repay the loan, usually via payroll deductions, unless you leave your job. In that case, you may need to pay the remaining balance immediately or face tax consequences and early withdrawal penalties.

The good news is that the interest you pay goes back into your account, and it’s usually set at 1% to 2% plus the prime rate — which is likely much lower than any other interest rate you’ll get, especially with bad credit. Plus, you don’t have to qualify, other than having a 401(k) that allows for loans and a sufficient balance.

But removing funds from your retirement account can impact the amount you’re able to save for retirement — as there may be years when that money isn’t invested.

Compare: 401(k) Loan vs. Personal Loan

How do hardship loans work?

Each type of loan and lender is different, often having different processes and standards for borrowing. Here are some of the most important things to take into account when considering your options.

• Interest rates: An interest rate is a percent of the amount you borrow that you pay the lender. Interest rates are usually based on how risky of a borrower the lender perceives you to be: If you are seen as a risky borrower, the rates might be quite high. If you are seen as less of a risk, the rates might be lower. 
• Fees: An origination fee is a common cost associated with a personal loan that is often deducted from the loan amount before it’s disbursed to you. Depending on the lender, an origination fee could be as high as 12%, but not all lenders charge them.
• APR: The APR is a great way to compare loan options apples to apples. For instance, what if one loan has an interest rate but no fees, while another charges fees instead of interest? The APR accounts for both upfront fees and interest to show you the total cost of the loan, expressed on an annual basis.
• Repayment terms: A repayment term is how long you have to repay the loan. For hardship loans this can vary widely, from 2 weeks for payday loans and cash advance apps, to multiple years for personal loans and 401(k) loans. Repayment terms are important because, generally speaking, the shorter the repayment term, the higher the monthly payment amount.
• Amount: It will be easier to qualify for a very small amount of money, like a sum under $500, as neither payday loan lenders nor cash advance apps typically consider your credit. Even if you qualify for a personal loan or other installment loan that runs your credit, you may still not qualify for a large amount if the lender doesn’t feel confident you can repay it.
• Credit score: A low credit score can affect your borrowing options, putting many affordable loans out of reach. Loans like payday loans and title loans that don’t weigh your credit score are usually high-cost and high-risk borrowing options.

Related: How Do Personal Loans Work?

How to get a hardship loan with bad credit

If you have a low credit score, you’re not without options. Here are some things to consider when applying for loans:

• Collateral: Putting up collateral — something you own, like a home or a car — to secure a personal loan can be a way to increase the amount you can borrow and lower the cost of the loan. Not all personal loan lenders offer secured personal loans, so seek out those that do. If you miss payments, you could lose your collateral.
• Cosigner: Again, not all lenders have this option, but some lenders allow you to apply for a loan with a cosigner. A cosigner should be someone with a good credit profile who will take on responsibility for the loan with you — if you don’t pay, they’re on the hook.
• Low credit score requirements: Some lenders offer low- or no-credit-score loans. Look for lenders with low minimum credit score requirements, and prequalify with them, before choosing a higher-risk option.

Of the hardship loan options mentioned above, PALs, some personal loans, and cash advance apps (without expedited funds fees or tips) can be good options if you have a low credit score. Again, compare APRs, and use a payday loan calculator to get a sense of how payday loan and cash advance app fees compare.

Alternatives to hardship loans

If you’re struggling to qualify for a personal loan or PAL and don’t want to take out a riskier loan, consider other options:

• Grants and financial assistance: If you are struggling to make rent, pay for medical expenses, or afford basic necessities like food and utilities, you may be eligible for financial assistance. Use the search feature at 211.org to see what’s available in your area.
• A family member or friend: If you have someone in your life that would be willing to help, it may be worth it to reach out. Come to a mutually agreeable repayment schedule with specific dates for when payments are due — and make a record of it for both of you to reference.

Read More:

• How to Get a Low-Interest Personal Loan
• How to Improve Your Personal Loan Application
• How to Get a Personal Loan if You’re Unemployed
• Best Banks for Personal Loans
• Best Credit Unions for Personal Loans

Disclosure: Some lending partners that participate in Credible’s comparison marketplace offer loans to borrowers with scores as low as 550. Borrowers with low scores will have fewer lending options than borrowers with higher credit scores.