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Not being able to pay bills due to job loss or other unexpected circumstances is a difficult position to be in. If you’re thinking about borrowing cash to stabilize your finances, a hardship loan is an option to consider. Below we discuss the best hardship loans and what you need to know to compare and apply for hardship loans when you have bad credit.
COMPANY | Forbes Advisor Rating | MINIMUM CREDIT SCORE | APR RANGE | LOAN AMOUNTS | Learn More | ||||
---|---|---|---|---|---|---|---|---|---|
Upgrade | 4.0 | 580 | 8.49% to 35.99% | $1,000 to $50,000 | Compare Rates | Via Credible.com's Website | |||
Avant | 4.0 | 580 | 9.95% to 35.99% | $2,000 to $35,000 | Compare Rates | Via Credible.com's Website | |||
Upstart | 4.0 | 300 | 7.80% to 35.99% | $1,000 to $50,000 | Compare Rates | Via Credible.com's Website | |||
Universal Credit | 4.0 | 580 | 11.69% to 35.99% | $1,000 to $50,000 | Compare Rates | Compare rates from participating lenders via Forbes Advisor | |||
LendingPoint | 3.5 | 600 | 7.99% to 35.99% | $2,000 to $36,500 | Compare Rates | Via Fiona.com's Website | |||
LendingClub | 3.5 | 600 | 7.99% to 35.99% | $2,000 to $36,500 | Compare Rates | Via Credible.com's Website | |||
Prosper | 3.5 | 560 | 8.99% to 35.99% | $2,000 to $50,000 | Compare Rates | Via Fiona.com's Website |
If you need to borrow money to get out of a financial bind, use these tips to compare hardship loans for poor credit:
A hardship loan is a form of personal debt you can use to take care of a financial shortfall or emergency expense. When surprise bills happen, unexpected costs can stretch an already tight budget to its limit. Maybe you have to get emergency surgery, or your car needs four new tires.
If you don’t have a credit card (or prefer not to use one) and you don’t have enough in savings to cover the entire expense, a personal loan can spread payments out over several months or even years. This can turn a huge bill into small, manageable monthly payments. However, you’ll owe interest on the amount you borrow, increasing the overall cost of the expense.
Hardship loans are personal loans that typically come with fixed interest rates and payments that are due monthly until you repay the balance.
After getting approved for a hardship loan, you’ll receive a lump-sum payment via direct deposit or check. You can use the funds to pay bills, catch up on rent or handle any other financial obligations you have.
Interest rates for personal loans go up to 36%, and having a limited credit history will likely result in high interest rates. However, applying for a loan with a co-signer who has good credit could help you get a better rate. In addition to loan interest, upfront origination fees could range from 1% to 8% of your loan amount.
Say you apply for a $5,000 loan to pay a medical bill for your child. With an APR of 25% and a loan term of 24 months, your payments would be $266.86 per month, and you’d spend a total of $1,404.58 in interest over the two-year loan term.
If you need lower payments, lengthening your loan term could reduce the monthly bill, but extending a loan term means you’ll pay more interest overall.
Applying for a hardship loan is much like applying for any other personal loan. Below are the steps to getting a hardship loan:
Like most debt, there are advantages and disadvantages to taking out a hardship loan. Here are the good and bad of hardship loans for borrowers with poor credit.
Aside from hardship loans, there are other loans and strategies that could help you make ends meet during a financial emergency.
Some federal credit unions offer PALs, which are designed to be an alternative to expensive payday loans when you need money quickly. These loans tend to have flexible eligibility requirements and a maximum interest rate of 28% APR. However, loan amounts only go up to $2,000, so this wouldn’t be a solution if you need a larger sum.
Setting up a loan arrangement with someone you know could be a way to avoid having to apply for a loan with a bank. Coming up with an interest rate and payment schedule in writing is a way to ensure you’re both comfortable with the arrangement. Once an agreement is signed, treat it like any other loan, where you prioritize paying back the sum by the agreed-upon deadline.
If you’re having trouble keeping up with a bill, call up the bill issuer as soon as you can. You may be able to negotiate a payment arrangement directly with them instead of borrowing money to cover the balance. Some service providers may even have special programs for low-income households or people experiencing financial hardship, like job loss.
We reviewed 29 popular lenders based on 16 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose the best lenders based on the weighting assigned to each category:
Within each major category, we also considered several characteristics, including available loan amounts, repayment terms, APR ranges and applicable fees. We also looked at minimum credit score requirements, whether each lender accepts co-signers or joint applications and the geographic availability of the lender. Finally, we evaluated each provider’s customer support tools, borrower perks and features that simplify the borrowing process—like prequalification options and mobile apps.
Where appropriate, we awarded partial points depending on how well a lender met each criterion.