3 Loans for Bad Credit with Monthly Payments

There are times we find ourselves in a tight spot and need a little extra money.

cash loan

Unfortunately, too often, it’s easy to turn to a credit card. However, credit cards can easily carry an interest rate of 17% APR to more than 25% APR. If you make small minimum payments, it’s hard to make real progress, and you can never be sure when, exactly, you’ll be able to pay off the debt.

On the other hand, a personal loan can be a better choice — even with a bad credit history. With installment loans, you know exactly how much you’ll repay and when you’ll be done.

Best Installment Loans for Bad Credit

Compare multiple lenders to see which online loans are best for you. Look for interest rate, monthly payment, and other terms to help you decide what is most likely to help you get out of debt.

No matter where you apply, though, realize that there will be a credit check. What you’re offered will depend on your credit score, income, and how long the term is. When you have a higher credit score, you’re more likely to get a lower interest rate. And, of course, if you can pay off your loan faster, some lenders will also offer a lower rate.

Here are some of the best lenders for those with bad credit.


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  • Loan Amount: $500 – $10,000
  • APR: 5.99% to 35.99%
  • Term: 3 to 72 months

With CashUSA, you use a network to get funds directly into your bank account. It doesn’t matter what type of credit you have, it’s possible for you to find a loan.

In most cases, you receive a decision in minutes, and you can use the loan for any purpose. Plus, you’ll find that you can get funds deposited directly into your bank account by the next business day.

Read our full review of CashUSA


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  • Loan Amount: Up to $2,500
  • APR: Varies, depending on state, lender, and credit score
  • Term: Varies, depending on type of loan and state

MoneyMutual is an online marketplace of lenders that can connect you with various options. Almost any type of credit is acceptable. However, these are short-term personal loans, and the interest rates and loan terms and conditions vary.

Some online installment loans offered through MoneyMutual are similar to payday loans. In states where it’s allowed, a payday loan could lead to very higher interest rates of more than 200%. Carefully consider the loan offer before you accept it.

However, if you need money within 24 hours, and you just need a relatively small amount, MoneyMutual can help you find a match.

Read our full review of MoneyMutual


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  • Loan Amount: $500 to $10,000
  • APR: 5.99% to 35.99%
  • Term: 3 to 60 months

With Bad Credit Loans, you can get connected with a lender quickly and easily. You can even get your money as soon as the following business day. This is one of the oldest places to find bad credit installment loans online, as it has been operating since 1998.

No matter your situation, you’re likely to be able to find a personal loan with this website. You can use the funds for any purpose, and make installment payments that you can afford for up to five years.

Read our full review of Bad Credit Loans

The Basics of Installment Loans: What You Need to Know

When it comes to borrowing money, the landscape is vast and varied. Among the different financial tools available, installment loans stand out for their structure and predictability. This section aims to shed light on what installment loans are, how they compare to other loan types, especially revolving credit lines, and the pros and cons of opting for an installment loan.

What is an Installment Loan?

An installment loan is a type of loan that is repaid over time with a set number of scheduled payments. Unlike credit cards, which are examples of revolving credit, installment loans provide a fixed amount of money upfront, with the borrower agreeing to pay back the principal and interest in regular installments over the term of the loan.

Installment Loans vs. Revolving Credit Lines

The main difference between installment loans and revolving credit lines like credit cards lies in the loan structure and repayment terms. With a revolving credit line, you have a credit limit that you can borrow against, repay, and then borrow again. It offers flexibility but less predictability in monthly payment amounts and total interest costs over time.

In contrast, an installment loan gives you a lump sum upfront, and you know exactly how much you need to pay each month until the loan is fully repaid. This structure makes it easier to budget for your loan payments, but it lacks the flexibility to re-borrow funds without applying for a new loan.

Advantages of Installment Loans

  • Fixed payments: Knowing your monthly payment amount and when the loan will be paid off can help with budgeting and planning.
  • Lower interest rates: Often, installment loans have lower interest rates compared to revolving credit lines, particularly for borrowers with good credit histories.
  • Potential for large loans: Installment loans can cover significant expenses, such as buying a home or car, which might not be feasible with a credit card.

Potential Pitfalls of Installment Loans

  • Less flexibility: Once you receive an installment loan, you cannot borrow more money without applying for a new loan.
  • Penalties for early repayment: Some installment loans come with prepayment penalties, charging you for paying off your loan early.
  • Risk of overborrowing: The fixed nature of installment loans might encourage borrowing more money than needed, leading to unnecessary debt.

Making an Informed Decision

Choosing between an installment loan and a revolving credit line depends on your financial situation, borrowing needs, and ability to repay. Installment loans are best suited for individuals who need a specific amount of money for a one-time expense and prefer the stability of fixed payments. On the other hand, a revolving credit line might be more appropriate for those who value flexibility and are confident in their ability to manage fluctuating payment amounts.

Before deciding, consider the loan’s interest rate, fees, and repayment terms. Shop around and compare offers from multiple lenders to find the best deal that fits your financial goals and budget. Remember, taking on any form of debt is a significant decision, and it’s essential to choose a loan that aligns with your long-term financial health.

How do installment loans work?

Installment loans are typically used to finance large purchases, such as a car or home, or to consolidate debt.

Here’s how installment loans work:

  1. The borrower applies for the loan by completing an application and providing personal and financial information to the lender.
  2. The lender reviews the borrower’s application and makes a decision about whether to approve the loan.
  3. If the loan is approved, the lender will provide the borrower with a loan agreement that outlines the terms of the loan, including the interest rate, loan amount, repayment period, and any fees associated with the loan.
  4. The borrower reviews the loan agreement and decides whether to accept the loan. If the borrower accepts the loan, they will typically be required to sign a promissory note and provide collateral, if required.
  5. The borrower receives the loan funds and begins repaying the loan according to the terms of the loan agreement. These payments may include both principal and interest.
  6. The borrower continues to make payments until the loan is fully repaid.

It’s essential to carefully review the terms and conditions of any installment loan you are considering before accepting it. Make sure you understand the interest rate, loan amount, repayment period, and any fees or restrictions that may apply. It’s also a good idea to shop around and compare offers from multiple lenders to find the best deal.

How to Choose an Installment Loan for Bad Credit

If you have bad credit and are considering taking out an installment loan, here are some things to consider:

  • Shop around: Start by researching lenders who specialize in loans for those with poor credit. It’s vital to compare not just the interest rates, but also the terms they offer. This will help you find a loan that fits your needs without exacerbating your financial situation.
  • Consider the interest rate: Loans tailored for individuals with bad credit often come with higher interest rates. Make sure you comprehend the rate you’ll be subjected to and its impact on the total amount you’ll owe over the life of the loan.
  • Check the fees: Be aware that some lenders might include extra charges such as origination fees or penalties for late payments. Understanding all associated costs is essential to gauge the true cost of the loan.
  • Look at the repayment terms: Lenders offer various repayment schedules. Familiarize yourself with the duration of the loan and how the repayment structure matches your financial capability.
  • Consider your financial situation: It’s important to ensure that you can comfortably manage the loan’s repayment schedule without overextending your finances. Borrowing more than you can handle could lead to further financial distress.
  • Read the fine print: Before committing, thoroughly review the loan agreement. Understanding all terms, including any potential fees and penalties, will help you avoid surprises down the line.

By considering these factors, you can choose an installment loan that meets your needs and that you can afford to pay back.

Understanding the Real Cost of Lower Monthly Payments

Lower monthly payments on a loan can seem like a breath of fresh air to your budget, making large expenses seem more manageable in the short term. However, it’s essential to peel back the layers and understand the real cost of opting for these seemingly manageable payments over a longer loan term. The allure of lower monthly outlays can often mask the increased total interest paid over the life of the loan, impacting your financial health more significantly than you might initially realize.

The Long-Term Cost of Convenience

When you choose a loan with lower monthly payments by extending the loan term, you’re essentially spreading the cost of the borrowed amount over more months or years. While this approach reduces your immediate financial burden, it increases the amount of interest you’ll pay over time. This is because interest accumulates over the duration of the loan, and more months means more interest payments.

For example, consider a $10,000 loan with an APR of 10%. Opting for a 3-year term might result in monthly payments of approximately $323, with total interest paid around $1,616. Stretching that same loan to a 5-year term might lower the payments to $212, but the total interest paid jumps to $2,748. Here, the convenience of lower payments translates to a significantly higher cost due to the extended period of interest accumulation.

Balancing Payments with Financial Goals

Understanding the trade-off between lower monthly payments and total interest paid is essential. It requires a careful balance that considers both your current financial capacity and your long-term financial health.

Before committing to a loan, it’s important to evaluate how the repayment of your loan fits into your budget. Will opting for lower payments now strain your finances less, or will the additional interest paid over time detract significantly from your long-term financial goals?

To make an informed decision, consider your broader financial landscape, including your savings goals, investment plans, and other debt obligations. Sometimes, accepting a higher monthly payment for a shorter duration may align better with long-term financial health, especially if it means paying less interest overall and becoming debt-free sooner.

Tools and Strategies for Informed Decisions

Fortunately, several tools and strategies can help you handle these decisions. Loan calculators are invaluable for comparing different loan terms and understanding the implications of various monthly payments on the total interest paid. Additionally, speaking with a financial advisor can provide personalized insights into how different loan options might fit into your overall financial plan.

Moreover, consider other ways to reduce the cost of borrowing, such as improving your credit score to qualify for lower interest rates or exploring loan alternatives that might offer more favorable terms.

When to Consider an Installment Loan

Opting for an installment loan might be a wise decision under specific circumstances, particularly when facing a need for a significant sum that you prefer to pay back over time. These loans are ideal if your income is consistent enough to handle the monthly payments without straining your finances.

Ideal Scenarios for an Installment Loan

  • Significant purchases: Whether it’s acquiring a new vehicle or funding a home renovation project, big-ticket items come with hefty price tags. An installment loan can bridge the gap when your savings fall short, allowing you to make your purchase now and pay over time.
  • Debt consolidation: If you’re juggling various debts with high interest, consolidating them into a single installment loan with a lower interest rate can simplify your finances. This move can reduce your monthly payment burden and potentially save you money on interest over time.
  • Handling emergencies: Life’s unpredictability can bring about sudden financial needs, from medical emergencies to urgent home repairs. Without an emergency fund, covering these costs can be challenging. An installment loan can provide the necessary funds promptly, preventing minor emergencies from escalating into financial crises.

Assessing Your Financial Readiness

Before committing to an installment loan, consider your financial situation. Make sure the monthly payments align with your budget and won’t jeopardize your financial stability. If the decision seems daunting, seeking advice from a financial advisor or credit counselor can offer clarity. They can help you weigh the benefits and drawbacks in the context of your overall financial plan, guiding you toward the most prudent choice.

Where can I get an installment loan for bad credit?

There are several places you can get an installment loan for bad credit, including:

  • Online lenders: Many online lenders offer installment loans for bad credit. You can apply for a loan online and receive a decision quickly.
  • Credit unions: Credit unions are often more willing to work with borrowers who have bad credit. You may be able to get an installment loan from a credit union if you are a member.
  • Traditional banks: Some traditional banks offer installment loans for bad credit, although you may have a harder time getting approved for a loan if you have a low credit score.
  • Peer-to-peer lenders: Peer-to-peer lenders are online platforms that connect borrowers with individual investors who are willing to lend money. You may be able to get an installment loan from a peer-to-peer lender even if you have bad credit.

Alternatives to Bad Credit Loans

When you’re facing financial hurdles with a less-than-stellar credit score, it might seem like bad credit loans are your only option. However, several alternatives can help you meet your financial needs without resorting to high-interest loans. These alternatives are not only practical but can also set you on a path toward improved financial health.

Secured Loans: Leverage Your Assets

Secured loans are a viable alternative to bad credit loans, requiring collateral like your home or car. Since these loans are backed by assets, lenders may offer lower interest rates compared to unsecured bad credit loans.

It’s a double-edged sword, though. While you might secure more favorable loan terms, remember that failing to make payments could result in losing your asset. If you have property or a vehicle you can use as collateral, secured loans could be worth considering.

Credit Builder Loans: Boost Your Credit Score

Designed specifically to help individuals improve their credit scores, credit builder loans are a unique tool in your financial arsenal. Unlike traditional loans, with a credit builder loan, you make regular payments to the lender, and you receive the loan amount only after you’ve made all your payments.

This process helps you build a positive payment history, which is a major factor in your credit score. Credit unions and community banks often offer these loans, making them accessible to those looking to enhance their creditworthiness.

Seeking Financial Counseling: Get Expert Guidance

Financial counseling is an invaluable resource when you’re trying to improve your financial situation. Working with a certified financial counselor can provide you with personalized advice on managing debt, creating a budget, and improving your credit score.

Financial counselors can also help you understand the full range of loan options available to you, based on your specific circumstances. Non-profit credit counseling agencies offer services at low or no cost, providing a budget-friendly way to get expert financial advice.

Family Loans: Borrowing from Loved Ones

Borrowing money from family or friends is another alternative to consider. Such loans can come with lower interest rates and more flexible repayment terms. However, mixing finances and personal relationships can be tricky. To avoid misunderstandings or hard feelings, it’s advisable to formalize the loan with a written agreement outlining the loan amount, interest rate, repayment schedule, and any other relevant terms.

Bottom Line

Finding the right loan option when you have bad credit can be a challenging journey. While bad credit loans with monthly payments provide a lifeline in tough times, they’re not your only option. As we’ve explored, alternatives like secured loans, credit builder loans, financial counseling, peer-to-peer lending, and borrowing from loved ones offer viable paths to financial recovery and growth.

Each alternative comes with its set of advantages and considerations, from potentially lower interest rates with secured loans to the credit-building benefits of credit builder loans. Seeking financial counseling can offer personalized strategies for managing debt and improving your financial standing, while peer-to-peer lending and loans from family or friends present more flexible, sometimes more affordable, borrowing options.

The key to choosing the right loan extends beyond immediate financial relief. It’s about considering the long-term impact on your financial health, the total cost of borrowing, and the pathway it provides towards rebuilding a stronger, more resilient credit profile. As you weigh your options, remember that the goal is not just to bridge a financial gap, but to set the foundation for a more secure financial future.

Miranda Marquit
Meet the author

Miranda has been covering personal finance topics for more than 10 years as a freelance writer and journalist. She has contributed to Forbes, NPR, MarketWatch, Yahoo! Finance, U.S. News and World Report, and many other media outlets. Miranda has an M.A. in Journalism and is currently working on an MBA. She lives in Idaho with her son, where she enjoys reading, travel, and the outdoors.