Best Direct Lenders for Bad Credit 2023

Disclaimer: This is sponsored content. All opinions and views are of the advertiser and does not reflect the same of WTKR.

The best direct lenders for bad credit are personal loans. They offer quick cash with favorable APRs and terms for borrowers in the 300 to 669 credit score range. Expect loans from $100 upwards of $100,000, with APRs capped at 35.99%. However, bad credit borrowers should expect closer to the 15% to 35.99% range. As with all loans, some exceptions apply. Fortunately, if you are not approved for a direct personal loan, because of your bad credit, there are a variety of other options.

It is important to differentiate bad credit personal from payday lenders. Payday lenders offer high risk and no credit check loans that are too expensive and average at 400% APR. We highly recommend avoiding them. Legitimate direct lenders for bad credit include: online lenders; credit unions, offering a mix of sub -8% APR secured and unsecured personal loans; Buy Now, Pay Later Apps like Klarna and Affirm; cash advance apps like Earnin offering 0-interest, no credit check cash advances for bad credit. And the approval on bad credit is almost with no denial. With over 90% approval rate for bad credit, we can say it is almost guaranteed approval.

Keep reading to learn more about your options for bad credit, including our top recommendations, pros/cons, and how to apply/ qualify for a bad credit direct loan.

Best Direct Lenders for Bad Credit Personal Loans List 2023

Here are the best direct lenders for bad credit that are personal, not payday loans.

ZippyLoans – 4.9/5.0 – Best Overall

LifeLoans – 4.8/5.0 – Best Direct Lenders for Bad Credit

FundsJoy – 4.8/5.0 – Best for Payday Alternative Loans No Denial

Earnin – 4.8/5.0 – Best Cash Advance App

LendingPoint – 4.6/5.0 – Best Direct Lender for Poor and Fair Credit

Navy Federal Credit Union – 4.6/5.0 – Best Credit Union for Small Personal Loans

First Tech Federal Credit Union – 4.6/5.0 – Best Credit Union for Large Personal Loans

ZippyLoans

Rating: 4.9/5.0

ZippyLoan

ZippyLoans is an online marketplace that connects borrowers with thousands of direct bad credit lenders, offering personal installment loans from $100 and $15,000, all with funding in as little as one business day, repayment terms of up to 60 months, and APRs from 12% – 35.99%.

It specializes in installment personal loans from direct lenders, alternative to predatory payday loans that charge upwards of 400% APRs. It is an ideal option to cover short-term expenses like unexpected medical bills or longer-term endeavors like home improvement projects.

Most lenders listed at ZippyLoan are no credit check. Some lenders can perform a credit check, but they approve bad credit, so don’t worry about that too much. ZippyLoan has the highest approval rate, although the approval is not guaranteed. If you are looking for no denial lenders, try ZippyLoan.

How to Apply: To apply for a ZippyLoans loan, visit the website and submit your application. The application will ask for your requested loan amount, credit rating, contact information, employment details, and contact/deposit information before being presented with a compatible list of lenders.

Eligibility:

• At least 18 years of age
• U.S. citizen or permanent resident
• Valid checking or savings account
• Recurring employment income
• Completed online application

Highlights: 

• Online marketplace
• 12.00% – 35.99% APRs
• Loans from $100 – $15,000
• Approval in 1 to 7 days

Pros:

• Best direct lender network for bad credit personal loans
• Up to $15,000, which is very high for bad credit
• APRs from 12% – 35.99%
• Fast and easy approval
• Hardship exemptions available
• High approval rate
• Expansive network of participating direct bad credit lenders
• Reports on-time payments to credit bureaus

Cons:

• Not a direct lender
• Some lenders charge loan origination fees
• Not available in New York, Oregon, West Virginia, and the District of Columbia

Terms: ZippyLoan is not a payday, auto title, or direct lender. Personal loans made through ZippyLoans feature Annual Percentage Rates (APRs) of 12.00% – 35.99%. Origination fees vary, depending on the lender, which is deducted from the loan proceeds. For example, if you receive a $10,000 loan and a 12% APR (no origination fee) on a 1 year repayment term, you would pay a total of $10,661.85 ($661.85 in total interest paid). The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early.

LifeLoans

Rating: 4.8/5.0

LifeLoans

LifeLoans is a solid choice for bad credit borrowers looking to take out loans from $100 to $40,000 to cover short-term expenses.

Like ZippyLoans, LifeLoans is an online marketplace connecting prospective borrowers with a network of reputable personal bad credit direct and non-direct lenders competing for their business. Although APRs are not listed, we found many direct loans in the 4.99% to 35.99% range with varying fees and repayment terms. Additionally, many lenders offer guaranteed approvals and no credit checks.

LifeLoans mainly connect borrowers with direct lenders for bad credit personal loans. These loans are capped at 35.99%. However, these that can’t qualify get redirected to bad credit almost no denial payday alternatives. These loans are more expensive, but are better than traditional payday loans.

One of the best things about LifeLoans is its streamlined application process. It takes up to 5 minutes to complete, with funds deposited to your checking account in as little as one business day.

How to Apply: To apply for a LifeLoans loan, you must complete an online application through the LifeLoans website. Once qualified, you will be prompted to review and sign loan documents from a qualifying lender.

Eligibility:

• At least 18 years of age
• U.S. citizen or permanent resident
• Valid checking or savings account
• Completed online application

Highlights:

• Online marketplace
• Reliable APRs
• For bad credit borrowers
• Loans from $100 to $40,000
• Approval in 1 to 7 days 

Pros:

• Information 100% safe
• No minimum credit score
• Best bad credit personal loans from direct lender networks
• Loans from $100 to $40,000
• 5 to 10-minute application process
• Funds to your account within 1 to 2 business days
• High loan approval rate
• Almost no denial payday loan alternative

Cons:

• Not a direct lender
• Some loans exceed 400% APRs
• Not all lenders are transparent with rates and fees

Terms: LifeLoan is not a payday, auto title, or direct lender. Personal loans made through LifeLoan feature Annual Percentage Rates (APRs) of 4.00% – 100%. Origination fees vary, depending on the lender, which is deducted from the loan proceeds. For example, if you receive a $10,000 loan and a 34% APR (no origination fee) on a 1 year repayment term, you would pay a total of $11,935.82 ($1,935.82 in total interest paid). The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early.

FundsJoy

Rating: 4.8/5.0

Funds Joy

FundsJoy is an online marketplace connecting bad credit borrowers with a huge list of lenders in their network, specializing in bad credit unsecured personal loans, cash advances, and payday alternative loans. This payday alternative referral service offers access to various loans starting at $200 up to $5,000 with APRs from 5.99% – 35.99% in most cases.

Some FundsJoy offers for bad credit borrowers include unsecured bad credit personal loans, cash advance loans, and installment loans. Bad credit personal loans offer APRs up to 35.99% for cash advance and installment loans. Consider FundsJoy an excellent source of fast and easy cash, but try to pay it back by the first due date to avoid higher-than-average interest.

FundsJoy is no credit check lender. However, some of their lenders can perform a credit check, but they work with bad credit. The approval rate with FundsJoy is not guaranteed.

How to Apply: To apply for a FundsJoy unsecured loan, you must complete an online form (no more than 10 minutes to complete). It will ask for your personal information, desired loan amount, last four SSN digits, email address, and other information to determine eligibility.

Eligibility:

• At least 18 years of age
• U.S. citizen or permanent resident
• Valid checking or savings account
• At least $800 a month in earnings 
• Completed online application

Highlights: 

• Online marketplace
• Loans from $200 – $5,000
• Approval in as little as 5 minutes
• All types of loans available (e.g. unsecured and secured personal loans)

Pros:

• Up to $5,000, which is high for bad credit
• Best direct lender for bad credit payday alternatives
• No prepayment penalties
• High approval rate
• Extensive network of direct online lenders
• Repayment term length of 1 to 5 years
• Approval in as little as one business day
• Quick and easy online application process

Cons:

• No minimum credit score disclosed
• $800 minimum monthly income required
• Late and insufficient funds fees apply
• Loan origination fees of up to 5%

Terms: FundsJoy is not a payday, auto title, or direct lender. Personal loans made through FundsJoy feature Annual Percentage Rates (APRs) of 5.99 – 35.99%. Origination fees vary, depending on the lender, which is deducted from the loan proceeds. For example, if you receive a $12,000 loan and a 18% APR (no origination fee) on a 1 year repayment term, you would pay a total of $13,201.92($1,201.92 in total interest paid). The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early.

Earnin

Rating: 4.8/5.0

Earnin

Earnin is an excellent cash advance service for lower-income, lower-credit-score borrowers looking to address paycheck gaps, allowing you to borrow up to $100 a day (maximum of $750 per pay period). That is why they are at the top of our loan app list. Earnin is no credit check direct lender that works with bad credit borrowers. Earnin is a great payday lender alternative.

Unlike traditional lenders, which run credit checks, Earnin determines your creditworthiness in other ways. For example, it verifies time sheets, pay stubs, and additional employer information to determine your eligibility. Its service is good for a 3-day free cash advance with a nominal $3.99 charge for same-day cash advances.

How to Apply: To apply for an Earnin loan, download the Earnin app and follow all instructions for creating an account, setting up a bank connection, and uploading your employment information. You may add your earnings by uploading an electronic timesheet or providing an employer work email address.

Eligibility:

• At least 18 years of age
• U.S. citizen or permanent resident
• Fixed work location 
• Electronic timekeeping/pay stub proof of income
• Completed online application
• More than 50% of your direct deposit regularly sent to a valid checking account

Highlights:

• 0% interest
• Approval in as little as 5 minutes
• Funds sent to your checking account
• Cash advances (up to $100 daily/$750 per pay period)

Pros:

• No credit check direct lender for bad credit
• No interest
• Easy and fast approval
• Available on IOS and Android
• Funds to your account in seconds
• Low balance alerts via Balance Shield
• Excellent financial support for COVID-19-affected customers

Cons:

• Very low limit of only $150 per day and $750 per period
• Offers no installment loans only
• High approval rate, almost no denial
• Fee applies for same-day cash advances ($3.99)
• No reporting of payments to credit bureaus
• Must receive work payments via direct deposit into a bank account
• Optional tip feature (maximum $14)

Terms: Earnin is a cash advance app that offers 0% cash advances to borrowers who repay it with their next paycheck. Repayment terms is a rescheduled debit (single installment) for your next pay period. An example $500 cash advance with 0% interest results in total loan payments of $500. Earnin is available in all 50 states.

LendingPoint

Rating: 4.6/5.0

LendingPoint

With hundreds of thousands of borrowers to date, Atlanta-based LendingPoint is an unsecured personal installment lender connecting fair credit borrowers with loan amounts from $2,000 to $36,500. They have flexible repayment terms and fast approvals. APRs range from 7.99% – 35.99%, repaid within 24 to 72 months.

These loans can be used for all expenses, including unexpected medical expenses, home improvement projects and impromptu weddings. LendingPoint is available in all states except Nevada and West Virginia.

How to Apply: To apply for a LendingPoint loan, you must complete an online application providing your desired loan amount, contact information, financial information (e.g. Individual pre-tax annual income, and create an account.

Eligibility:

• At least 18 years of age
• U.S. citizen or permanent resident
• Minimum 580 credit score
• Minimum annual income of $25,000
• Completed online application 

Highlights:

• Approval in 1 to 7 days
• 7.99% and 35.99% APRs
• Loans from $2,000 – $36,500
• All types of loans available (e.g. unsecured and secured personal loans)

Pros:

• Direct lender
• Up to $36,500 for fair credit
• Unsecured personal loans
• Long time monthly installment loans with repayment terms up to 5 years
• No origination, prepayment, or application fees
• Funds to your account in as little as one business day
• Flexible minimum credit score requirement (580)

Cons:

• Do credit check
• Origination fees of up to 6%
• No co-signing or co-borrowing option
• No forbearance for financial hardship programs
• Not available in West Virginia and Nevada

Terms: LendingPoint is not a payday, auto title, or direct lender. Personal loans made through LendingPoint feature Annual Percentage Rates (APRs) of 7.99% – 35.99%. Origination fees vary, depending on the lender, which is deducted from the loan proceeds. For example, if you receive a $16,000 loan and a 24% APR (no origination fee) on a 1 year repayment term, you would pay a total of $18,155.44 ($2,155.44 in total interest paid). The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early.

Navy Federal Credit Union

Rating: 4.6/5.0

Navy Federal Credit Union

With more than 12 million members, Navy Federal Credit Union is a strong choice for current and former military members looking for unsecured personal loans of as little as $250 to $50,000 with favorable APRs of 7.49% to 18%. Repayment terms are up to 60 months. It’s an excellent option for people looking to consolidate debt or cover unforeseen expenses like medical bills or auto repairs.

How to Apply: To apply for a Navy Federal Credit Union loan, visit the Navy Federal Credit Union website, complete an application, electronically sign it once approved, and watch funds deposited into your checking account in as little as one business day.

Eligibility:

• At least 18 years of age
• U.S. citizen or permanent resident
• Valid Social Security Number
• Current or former military member
• Must be an Alliant Credit Union member
• No minimum required credit score 

Highlights:

• APRs from 7.49% – 18%
• Loans from $250 – $50,000
• Approvals in 1 – 7 Days

Pros:

• Direct lender credit union
• Excellent APRs of 7.49% – 18.00% for bad credit loans
• Amount of $250 to $50,000
• Repayment terms up to 60 months
• No minimum credit score requirement
• No prepayment penalties
• Generous repayment term length of six to 60 months

Cons:

• Do credit check
• $29 late payment fee
• Closing expenses on some loans
• Denial are possible because of bad credit
• No pre-qualification tool
• Auto-pay discount not available
• Need to be a Navy Federal Credit Union member

Terms: Personal loans made through Navy Federal Credit Union feature Annual Percentage Rates (APRs) of 7.49% – 18% with no origination fees For example, if you receive a $20,000 loan and a 9% APR on a 1 year repayment term, you would pay a total of $20,988.35 ($988.35 in total interest paid). The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early.

First Tech Federal Credit Union

Rating: 4.6/5.0

First Tech Federal Credit Union

We highly recommend First Tech Federal Credit Union as one credit union in our list for borrowers looking for straightforward terms with no origination, prepayment, or late fees, the only lender on our list to offer it. In addition, it provides fair credit loans of up to $50,000 to people with a minimum credit score of 660.

How to Apply: To apply for a First Tech Federal Credit Union personal loan, you must sign up as a member. Then, visit its online application form and enter your personal information, including your social security number, home address, employer information, and funding account/routing number. It only takes less than 10 minutes.

Eligibility:

• At least 18 years of age
• U.S. citizen or permanent resident
• Minimum 660 credit score 
• Must be a First Tech Federal Credit Union member

Highlights: 

• APRs from 7.49% – 18%
• Loans from $500 – $50,000

Pros:

• Direct lender credit union
• Up to $50,000 unsecured loans for poor and fair credit
• Excellent APRs up to 18%
• Lowest credit score requirement (660)
• Generous monthly repayment term length of 5 to 12 years
• No origination prepayment or late fees

Cons:

• Do credit check
• Denial are possible because of bad credit
• Must be currently employed
• Hardship/forbearance programs available
• Some applications take more than one business day

Terms: Personal loans made through First Tech Federal Credit Union feature Annual Percentage Rates (APRs) of 7.70% – 18% with no origination fee. For example, if you receive a $15,000 loan and a 11% APR on a 1 year repayment term, you would pay a total of $15,908.70 ($1,325.72 in total interest paid). The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early.

What Are Direct Lenders For Bad Credit?

Direct lenders offer loans directly to borrowers. The most popular ones are banks, credit unions, and online lenders. Banks don’t offer loans for bad credit, so we skip them.

People prefer direct lenders instead of peer to peer because they think that they will pay less fees. This is true, but not always. In fact, there are some peer to peer lenders and loan marketplaces that offer better and fee-free loans. Loan marketplaces are not direct lenders. They only connect you with direct lenders. The marketplaces listed here are fee-free, so you can consider them direct lenders.

How Do Direct Lenders For Bad Credit Work?

Direct lenders for bad credit generally extend loans up to $50,000, offering fixed rates and payments. APRs usually top out at 35.99%, with prepayment, origination, and application fees varying depending on the lender. Many require no minimum credit score, debt-to-income ratio, and income history.

Today, bad credit direct lenders may offer one or more of the following types of loans/financing: unsecured personal loans, secured personal loans, joint personal loans, Buy Now, Pay Later, and cash advance apps.

Unsecured and secured personal loans are installment loans paid overtime with regularly scheduled payments.

Joint personal loans enlist the help of a cosigner with a higher income/credit score to secure lower interest rates.

Buy Now, Pay Later apps allow borrowers to split purchases into equal installments with no interest up to a specific date.

Cash advance apps are a nice source of easy, fast cash, withdrawing the borrowed funds directly from your bank account on your next payday. It’s an excellent option in emergencies such as unexpected medical expenses or skyrocketing phone bills.

Types of Direct Lenders for Bad Credit

There are many bad credit direct lenders. Mainly we will categorize them on recommend and non-recommended.

Non-recommended bad credit direct lenders are payday, auto title and pawnshop lenders. We don’t recommend them because they are very expensive and there are many cheaper options people can get with bad credit. Many people think that payday loans are the same as no credit check loans, bad credit loans, cash loans and etc. That is not true.

Recommended bad credit direct lenders are personal lenders, alternative payday lenders, loan apps, buy now pay later apps, credit unions and others. These lenders have very high approval rate for bad credit and offer cheaper than payday loans. Many of those can be no credit check loans and almost no denial.

It is very important to differentiate these types of loans, because you will avoid overpaying and debt cycle.

Direct Lenders for Bad Credit Personal Loans

Direct lenders for bad credit offer personal loans to people with no/limited credit history and low credit scores in the 300 to 629 range. The main sources for them are credit unions and online lenders. Secured and unsecured bad credit loans usually offer as little as $100 upwards of $100,000, with APRs topping out at 35.99%.

There are several types of loans offered by direct lenders for bad credit. They are unsecured personal loans, secured personal loans, cosigned personal loans, joint personal loans, Buy Now, Pay Later, and cash advance apps.

Unsecured personal loans do not require that a borrower put up collateral, such as a home or vehicle. As a result, they generally have the lowest interest rates and most flexible lending terms.

Secured personal loans require collateral, which is an excellent option for people with bad credit.

Cosigned and joint personal loans allow a second party to be responsible for payments if the primary borrower defaults. It’s an excellent way to secure lower interest rates.

Buy Now, Pay Later apps like Klarna and Affirm offer installment loans that divide online store purchases into equal payments. First payments are due at checkout, ensuring payments are owed every two weeks or monthly. With short-term “Paid in 4” installment programs and similar plans, borrowers enjoy 0% interest rates. However, longer-term BNPL plans charge APRs up to 35.99% on top of insufficient funds and late payment fees up to a specified percentage of the purchase value.

Lastly, cash advance apps like Earnin offer small loans covering gaps in paychecks. For example, Earnin provides a maximum loan amount of $100 daily ($750 per payperiod) In exchange for 0% interest and an optional $14 tip. Funds are deposited to your account in as little as one business day. Beyond direct funds, cash advance apps offer budgeting tools, overdraft protection, and other credit-building tools to help you become a more informed borrower.

Direct Lenders for Bad Credit Payday Loans

There are three bad credit lenders to avoid: payday, pawnshop, and auto title lenders.

Payday Loans. If you search for no denial payday loans direct lenders, you will find a lot of them. It is true that they are with very high approval rate, are direct lenders, and are with almost no denial.

But they are very expensive, that is why we highly recommend avoiding them. Also referred to as cash advance or check advance loans, payday loans are short-term unsecured loans up to $500 with APRs as high as 400%. Thanks to its well-deserved reputation for predatory practices and outrageous fees, payday loans are outlawed in 16 states.

Payday lenders offer no credit check loans. Instead of checking your credit score, they require proof of income, which determines how much you are eligible for. In states where payday loans are legal, we advise against them at all costs.

Conclusion: Payday loans are a type of high risk loans with almost no denial, but are very expensive.

Pawnshop Loans. Also referred to as collateral loans, pawn shop loans require putting up collateral, such as a television for a family heirloom. Once the pawn shop determines its appraised value, borrowers are awarded alone equal to a specific percentage of its resale value.

Like payday loans, they are almost guaranteed, no denial loans. They are direct lenders. But they are very expensive.

This percentage generally straddles between 25% and 60% of your collateral resale value. Their APR is about 200%.

Conclusion: Non-recommended loans, although are direct lenders and with almost no denial.

Auto Title Loans. Like pawn shop loans, auto title loans offer up to $10,000 with APRs in the 300% APR range. However, they require putting up a vehicle as collateral. Expect to be awarded anywhere from 25% to 50% of the value of your car.

Auto title lenders extend a loan equal to a percentage of the vehicle’s appraised value. Failure to repay the loan forces the auto title lender to repossess your car and sell it to earn back their principal. Auto title loans, like payday loans, are illegal in more than ten states.

Conclusion: If you put your car as a collateral, you should expect almost no denial. However the rates are too expensive to recommend you such loans.

What Is the Difference Between Direct and Non-Direct Lenders?

The difference between direct and non-direct lenders comes from institution type, funding source, and loan management.

Direct lenders like banks, credit unions, and online lenders are directly responsible for issuing loans without an intermediary. They do everything from handling your application to finding your account in as little as one business day. In addition, all of your financial and personal information is provided to and managed by direct lenders.

In turn, non-direct lenders act as many intermediaries, allowing prospective borrowers to comparison-shop multiple direct lenders in one sitting. These include marketplaces like ZippyLoan and OppLoans.

Here are the pros and cons of direct and non-direct lenders.

Pros of Direct Lenders

Streamlined Approach. As funds are dispersed straight to your bank account from a direct lender, direct lenders offer a single point of contact for quick cash. Application review, underwriting, and approval are all managed under “one roof,” with funds disbursed to your bank account in as little as one business day. They also make it easy to complete loan applications with an in-branch visit or via an online application.

Better Fee Structure and Interest Rates. Direct lenders are more likely to offer competitive interest rates, and terms with APRs capped at 35.99%.

Cons of Direct Lenders

Varying Loan Terms and Conditions. APRs and terms between direct lenders may vary wildly for the same borrower. For example, one direct lender may offer a 12% APR and a two to three-year repayment term, whereas a second lender may offer a 7.99% APR on a seven-year repayment term. That’s why it’s essential to rate comparison shop at least three different bad credit direct lenders before pulling the trigger.

Hard to Compare Rates Sometimes. Rate transparency on direct lender websites varies. Some direct lenders are more upfront with APRs and repayment terms and conditions than others before completing an application. Fortunately, many direct lenders offer pre-qualification checks by performing soft inquiries to determine your creditworthiness before an application is approved.

Pros of Non-Direct Lenders

Access to Many Options. Non-direct lenders like ZippyLoan allow instant access to a diversified list of credible and legitimate direct lenders. In addition, many offer phone access in as little as one business day with no origination or late fees.

Solid Loan Amounts. Personal loan amounts from non-direct lenders generally start at $100 and go upwards of $15,000 with loan terms of up to 60 months. These loan amounts and repayment terms are equally useful for covering short-term expenses or longer-term items like home improvement projects.

Reporting to Credit Bureaus. Many long direct lenders report your credit activity to the three major credit reporting agencies — TransUnion, Experian, and Equifax. Remember, payment history accounts for 35% of your FICO score, so we appreciate this benefit from non-direct lenders.

Cons of Non-Direct Lenders

Information to Third Parties. Many non-direct lenders offer your application information to third parties, who may contact you with their loan products and services. Be sure to review your non-direct lender’s privacy policy.

Options to Avoid Payday Loans For Bad Credit Borrowers

Fortunately, many options are available for bad credit borrowers to avoid payday loans.

Cash From Family/Friends. Borrowing from family and friends typically offers the most straightforward terms possible with no contracts, interest, or repayment schedules. However, we highly recommend keeping loans at $500 or less with 2 to 4-week repayment terms, as fellow family/lenders have their monthly expenses to cover.

Credit Card Cash Advance. Credit card cash advances are short-term funds issued by credit card companies, borrowing against your existing credit line. If enabled, swipe your card at an ATM and enter a PIN. Note that credit card cash advances typically have higher interest rates than standard credit card purchases with service charges and no grace period.

Best practice for credit card cash advances is to borrow very little ($500 or less) and pay it off as fast as possible, as interest starts accruing immediately with no grace period.

Governmental Assistance. Although the federal government is well-known for its hardship programs, one often underlooked program is the Temporary Cash Assistance (TCA) program which provides cash assistance to families with children. Awarded through block grants by the federal government to each state, TANF serves as a vital lifeline for families struggling to pay utility and childcare bills on time.

For more information on the TANF program, including provisions by state, visit Temporary Assistance for Needy Families (TANF) by the Office of Family Assistance.

Are Direct Lenders for Bad Credit Unsecured Personal Loans?

Yes, many direct lenders for bad credit offer unsecured personal loans.

Some types of unsecured personal loans available to bad credit borrowers include personal loans (most common), student loans, cash advance apps, POS financing, and credit cards.

With unsecured installment-based personal loans, borrowers enjoy not needing to put collateral on the line. However, bad credit borrowers can expect slightly higher APRs, shorter repayment terms, lower loan amounts, and stricter qualification criteria with unsecured personal loans than secured personal loans due to the increased risk posed to the lender.

All of these provisions are one of the many reasons we appreciated cash advance apps (e.g. Earnin) and POS financing like Klarna. 0% interest for up to $750 per pay period is an excellent way for bad credit borrowers to avoid the traditional loan debt cycle.

How Can I Find the Best Direct Lenders for Bad Credit Personal Loans?

Here are our top recommendations on finding the best direct lenders for bad credit personal loans.

Determine the Amount You Need. Determine the amount you need with a dollar figure. Need to cover two months of unpaid bills? What about an impromptu wedding? Provide an estimated dollar figure for all of your expenses before finding the best direct lenders offering that amount in one shot.

Factor Your Budgeting. Once you have determined how much to borrow, use a personal loan calculator to figure out your monthly payment, inclusive of origination fees and first month’s payment including interest. Look towards a manageable monthly budget.

Check Your Credit Score. Visit annualcreditreport.com to pull your credit report from each of the three major reporting credit bureaus — Equifax, Experian, and Transunion. Then, pour over your credit reports with a fine-tooth comb, checking for any errors. According to the Consumer Financial Protection Bureau, one in five people discovers a mistake on their credit report.

Even a single error on your credit report can drop your score by 20 points or more, disqualifying you from securing the best rates on your best direct loan for bad credit.

If your credit score needs to improve, we recommend boosting it immediately. This includes paying off outstanding balances, lowering your credit utilization ratio, and diversifying your credit mix. Credit scores are calculated based on five categories — amount owed, credit history, credit mix, new credit, and payment history.

Payment history accounts for roughly 35% of your score versus 30% for the amount owed (balances), 15% for length of credit history, 10% for credit mix, and 10% for new credit. However, this is only a rough approximation as all credit scores are unique to each borrower (e.g., those with shorter credit histories will be assessed differently than those with longer credit histories).

Once you have learned your credit score or brought it up to a place you need it to me, finding and applying for the best direct lenders for bad credit becomes much easier.

How to Apply For Direct Lenders?

Here are all the steps needed to apply for the best direct loan for bad credit.

Check Your Credit Score. Visit annualcreditreport.com to pull your credit report from each of the three major reporting credit bureaus — Equifax, Experian, and Transunion. Then, pour over your credit reports with a fine-tooth comb, checking for any errors. According to the Consumer Financial Protection Bureau, one in five people discovers a mistake on their credit report.

Even a single error on your credit report can drop your score by 20 points or more, disqualifying you from securing the best rates on your best direct loan for bad credit.

If your credit score needs to improve, we recommend boosting it immediately. This includes paying off outstanding balances, lowering your credit utilization ratio, and diversifying your credit mix. Credit scores are calculated based on five categories — amount owed, credit history, credit mix, new credit, and payment history.

Payment history accounts for roughly 35% of your score versus 30% for the amount owed (balances), 15% for length of credit history, 10% for credit mix, and 10% for new credit. However, this is only a rough approximation as all credit scores are unique to each borrower (e.g., those with shorter credit histories will be assessed differently than those with longer credit histories).

Pre-Qualify. Look to pre-qualify for a minimum of three direct lenders. Pre-qualification allows borrowers to learn estimated APRs and monthly payments. Fortunately, pre-qualifying for a direct loan requires a soft inquiry which does not affect your credit score.

To pre-qualify for a direct loan, you all need to share the purpose of the loan, requested loan amount, preferred monthly payment/repayment term, and all personal information such as your name, social security number, address, income, and employment information.

Once a pre-qualification process is incomplete, expect to wait several minutes before being presented with a loan offer.

Selection. Once you have finalized pre-qualification from a minimum of three direct lenders, it’s time to choose your lender and loan. Select the best loan offer based on the annual percentage rate, payment flexibility, and various perks your direct lenders offer, such as credit counseling and financial education.

Gather All Documentation. Once you are ready to apply for a loan, gather all supporting documentation, including but not limited to name, social security number, employer information, income details (e.g., paystubs), and bank statements.

Complete Your Application. Once you have entered all personal information, verify all information is completed accurately and review your loan terms and conditions. Expect approval in as little as one business day, with funds deposited to your account within seven days.

How Can I Improve My Credit Score?

Fortunately, there are many ways to improve your credit score.

Making On-Time Payments. According to FICO, payment history accounts for 35% of its credit score calculation. Even a single missed payment can drop your FICO score by 20 points or more. One recommendation is to enroll in automatic payments with automatic withdrawals from your bank account, which will help you avoid forgetting to make payments.

Any unpaid balances that or escalated to collections will remain on your credit report for up to seven years.

Have missed payments? Continue to stay current. The longer you make on-time payments, the higher your credit score.

Lower Your Credit Utilization Ratio. According to FICO, your credit utilization ratio accounts for 30% of your credit score. Therefore, keep all outstanding balances under 35% of your credit limit and work to pay out credit cards with the highest interest rates first.

Other strategies to improve your credit utilization ratio include keeping unused credit card accounts open and not completing New credit card accounts within a short period, as it will lower your average account age.

Review Credit Reports Regularly. Make it a habit to review your credit report and check for errors. According to the Consumer Financial Protection Bureau, common mistakes in credit reports include identity errors (wrong address), incorrect account statuses (e.g., accounts mistakenly reported as delinquent), balance errors, and data management errors.

If you discover an error on your credit report, immediately contact your credit reporting company. Successful disputes to credit bureaus usually see corrections in as little as 30 business days.

To retrieve your credit report, visit annualcreditreport.com and request it from each of the three credit bureaus — Equifax, TransUnion, and Experian. It should take no more than 30 minutes.

Increase Length of Credit History. The higher your average age on all accounts, the better. Direct lenders look upon more extended credit history and the higher average age of accounts favorably, lowering your risk profile.

Remember, the higher your credit score, the higher the likelihood of being approved with favorable interest rates and terms.

Are Direct Lenders No Credit Checks?

Not all direct lenders offer no credit checks. In most cases lenders that offer big cash are do credit check. No credit check lenders are these that offer small cash.

Whether or not they perform credit checks depend on the type of lender (see our breakdown below).

• Credit card cash advances – no
• Cash advance loans – no
• Personal loans for bad credit – yes/no (depending on the lender)
• Payday loans – no
• Auto title loans – no
• Payday alternative loans (PALs) – yes/no
• Small business loans – yes
• Mortgage loans – yes
• Debt consolidation – yes/no

Are There No Denial Payday Loans by Direct Lender?

Payday loans have one of the highest approval rate, and comes from direct lenders. However, there are no loans with no denial. Every lender has its own criteria, and if you don’t meet them, you can be denied.

The chances of getting denied by all lenders these days and not getting any money are low. That is because these days there are many lenders, with different approval criteria, so the changes of not getting any loan are low. But still, we can’t say that there are no denial loans.

Direct lenders are just some of the ones to offer no-denial payday loans. High-risk personal loans only sometimes offer guaranteed approval by direct lenders.

One of our favorite sources for no-denial payday loans is online marketplaces like ZippyLoans and OppLoans, which connect borrowers to an extensive network of reputable lenders competing for your business. APRs, rates, and fee structures vary by lender and approval times. Approvals are generally from 1 to 7 business days, depending on each direct lender’s own underwriting policies. Be sure to refer to each individual lender for all of the fine print.

How Can I Find Legit Direct Lenders?

There are many ways you can find legit direct lenders.

Our recommended way of doing so is to comparison shop a minimum of three direct lenders, basing them on their rate/fee structure, loan terms, repayment options, loan amounts, and required minimum credit scores, and pouring through third-party websites to see how customers feel.

Remember to examine all fees, including origination application late and prepayment penalties.

Once you comparison-shop a minimum of three direct lenders using the above criteria, rest assured you will have increased confidence knowing that you picked the right direct lender for your financial situation.

How Did We Rank the Best Direct Lenders?

To rank the best direct lenders, we grade them based on five key criteria: APRs, fee structure, repayment terms, reputation, and various perks such as credit counseling and financial education resources.

APRs. Our preference goes to the best direct lenders with APRs not exceeding 35.99%. One of our preferred lending sources is Credit Unions which usually cap APRs at 18%. Well-respected institutions like First Tech Federal Credit Union and Navy Federal Credit Union fit the bill.

Fee Structure. At a minimum, look for the best direct lenders that offer no origination, application, or prepayment fees. Insufficient funds and late payment fees are fair game.

Repayment Terms. Our preferred best direct lenders extend loans that can be repaid in as long as seven years. Consider two to seven years a sweet spot, allowing flexibility for short-term and long-term goals.

Reputation. We want to find direct lenders with an unhealthy negative-to-positive feedback ratio. Websites like Trustpilot are our go-to to understand and get a feel for what consumers think about each lender.

Frequently Asked Questions

Do direct lenders offer easy approval?

No, not all direct lenders are for easy approval. There are a myriad of direct lenders looking to determine your creditworthiness, including your credit score, income, debt-to-income ratio, and other factors. Depending on the lender, expect up to seven business day turnaround for approval once your application is submitted.

Are there direct lenders for bad credit personal loans with guaranteed approval?

Yes, there are plenty of direct lenders for bad credit personal loans with guaranteed approval. They are known for offering APRs edging closer to 35.99% with lower rates available for secured loans. For example, LendingPoint gives loans up to $36,500 with APRs from 7.99% to 35.99% in exchange for a minimum credit score of 560 and a minimum annual income of $25,000.

Are no credit check lenders scams?

No, not all no credit check lenders are scams. One of the more popular no-credit-check lenders is Earnin, which determines your creditworthiness in other ways. For example, Earnin can offer small cash advances up to $100 per day or $750 per pay period by verifying your employment.

Non-direct lenders like ZippyLoan, operating as online marketplaces connecting prospective borrowers to lenders, are also an excellent source of legitimate no-credit-check lenders.

Can you consolidate bad credit loans with direct lenders?

Yes, direct lenders can consolidate bad credit loans. Consolidating bad credit loans with a lower APR loan allows borrowers to combine multiple payments into a single, accessible and manageable monthly payment, which is good for monthly budgeting and credit building.

Do direct lenders for online installment loans offer instant approval?

Not all online installment loans by direct lenders offer instant approval. Other factors go into determining your creditworthiness, such as income, debt-to-income ratio, and credit history. Additionally, many direct lenders require membership (e.g. credit unions) with minimum $5 deposit, adding to the approval time.

What can I use the loans for?

Loans can be used for all types of expenses, including but not limited to personal (e.g., weddings and Home Improvement projects), debt consolidation, Auto purchases, business expenses, and mortgages.

Final Thoughts on Direct Lenders for Bad Credit

Many direct lenders offer excellent APRs, repayment terms, fee structures, and other consumer-friendly services that make borrowing for bad credit borrowers a less complicated endeavor. Whether they are BNPL, POS financing, or your traditional personal loan, there is an excellent financing opportunity available for everyone and their financial situation.