Bad Credit Signature Loans from Direct Lenders: A Complete Guide

A signature loan is a type of unsecured personal loan that can provide access to fast financing if you have bad credit. With a signature loan, the lender uses only your signature and promise to repay – rather than collateral like a house or car – to approve the loan. This makes them a helpful option if you need money fast but don’t have an asset to secure financing against.

In this comprehensive guide we’ll explain everything you need to know about getting a bad credit signature loan from a direct lender. We’ll cover what signature loans are their pros and cons, interest rates, loan amounts, qualifications, and the best lenders to consider if you have bad credit.

What is a Signature Loan for Bad Credit?

A signature loan, also called a good faith loan, is a type of unsecured personal loan that is approved based on your creditworthiness rather than collateral. To get approved, you’ll provide information like:

• Identification (driver’s license, passport, etc.)
• Income verification
• Employment information
• Credit history and credit scores

The lender will review these details to determine if you qualify and decide the interest rate to charge you. Rates are usually higher for bad credit borrowers compared to those with good credit

Signature loans can be a good option if you need money fast but don’t have an asset like a house or car to use as collateral for a secured loan. The application is quick, funding is fast, and you can use the money for any legal purpose.

Signature Loan Amounts

Signature loan amounts can range from $1,000 to $50,000 or more. The amount you can borrow will depend on factors like your income, existing debt, and credit history.

Here are rough loan amount ranges to expect with different credit scores:

• Exceptional credit (780+): Up to $50,000+
• Good credit (680-779): Up to $35,000
• Fair credit (580-679): Up to $15,000
• Poor credit (below 580): Up to $5,000

Of course, every lender will have its own loan policies. But in general, the higher your credit score, the more you’ll qualify to borrow.

Signature Loan Terms

Signature loan terms are usually between 12 months and 5 years. Shorter terms of under 2 years are common for smaller loans of a few thousand dollars. Larger loans above $15,000 may have longer repayment terms up to 5 years.

The loan term will impact your monthly payments. For example:

• A $5,000 loan with a 2-year term would have monthly payments around $220.
• A $10,000 loan with a 3-year term would have monthly payments around $310.

Aim for the shortest term you can afford to pay off the loan faster and save on interest charges.

Signature Loan Interest Rates

Interest rates on signature loans can vary quite a bit depending on your credit history. Just like with credit cards, the better your credit, the lower the interest rate you can qualify for.

Here are average interest rates for signature loans by credit score tier:

• Exceptional credit (780+): 4% – 8%
• Good credit (680-779): 8% – 15%
• Fair credit (580-679): 13% – 21%
• Poor credit (below 580): 21% – 36%

With bad credit, you may pay higher rates but can still find options under 30%. Compare offers from multiple lenders because even a few percentage points can make a big difference in the total cost of your loan.

Pros of Bad Credit Signature Loans

Signature loans offer several benefits that make them a borrowing option to consider when you have bad credit:

• Fast funding: You can often get approved and receive funds within a few business days or less. This makes them great for unexpected expenses.

• Use funds for any purpose: Signature loans provide cash you can use flexibly, unlike loans for specific uses like an auto or mortgage loan.

• Improve credit: Making on-time payments can boost your credit, allowing you to qualify for better loan terms in the future.

• Consolidate debt: You may be able to use a signature loan to consolidate and pay off multiple high-interest debts.

• No collateral required: You don’t risk losing a valuable asset if you default.

Just make sure to borrow only what you can reasonably afford to repay to avoid making your finances worse.

Cons of Bad Credit Signature Loans

There are also some potential downsides of using a signature loan when you have bad credit:

• High interest rates: Interest rates can easily be over 20% if you have fair or poor credit. This makes loans expensive.

• Predatory lenders: Watch out for lenders that seem misleading or too good to be true. Seek established, reputable companies.

• Missed payment penalties: Late fees and penalties will worsen if you miss payments and default on the loan.

• Short terms: You may have a short 1-3 year repayment term, making monthly payments unaffordable.

As long as you borrow conservatively and budget for the payments, these cons can be minimized or avoided.

Qualifications for a Bad Credit Signature Loan

To qualify for a signature loan with bad credit, there are a few requirements you’ll typically need to meet:

• Minimum credit score: Most lenders require a minimum score between 550 and 600. The higher your score, the better the loan offer.

• Income: Most lenders want to see monthly income of at least $1,500, or annual income of $18,000 or more. Stable income improves approval odds.

• Age: You usually need to be at least 18 years old. Some lenders require you to be a minimum of 21 years old.

• U.S. resident: Signature loans require that you be a citizen or permanent resident.

• Debt-to-income ratio: Lenders may check your DTI (total monthly debt payments divided by income). The lower your existing debts, the better.

Meeting these requirements gives you the best shot at being approved. But having a previous bankruptcy, foreclosure, repossession or open collections accounts can also make qualifying more difficult.

How to Apply for a Bad Credit Signature Loan

Applying for a signature loan is quick and can often be done entirely online in minutes. Follow these steps:

1. Check your credit reports and scores so you know where you stand before applying. You can get your free annual credit reports and free credit scores from Credit Karma.

2. Research lenders and pre-qualify to find potential offers without affecting your credit score. Compare interest rates and fees.

3. Choose a lender and complete the application online. Have your personal and income documentation ready.

4. Get approved. The lender will review your application and issue a loan decision often in seconds.

5. Review loan terms and e-sign documents if approved. E-sign any loan paperwork sent to you.

6. Receive funds. Disbursement takes 1-7 days usually. The money will be deposited directly into your checking account.

It’s easy to apply and receive a lending decision rapidly. As long as you provide accurate information, you can get an offer tailored for your situation.

Top Direct Lenders for Bad Credit Signature Loans

Using a direct lender cuts out the middleman, offers faster approvals, and can provide more budget-friendly rates. Here are some top options for bad credit signature loans:

LendingPoint

• Loan amounts from $2,000 to $36,500
• Interest rates from 7.99% to 35.99% APR
• Terms of 2 to 5 years
• Minimum credit score of 585

Upgrade

• Loan amounts from $1,000 to $50,000
• Interest rates from 5.94% to 35.97% APR
• Terms from 2 to 7 years
• Minimum credit score of 580

OneMain Financial

• Loan amounts from $1,500 to $20,000
• Interest rates from 18.00% to 35.99% APR
• Terms of 2 to 5 years
• Minimum credit score of 550

Avant

• Loan amounts from $2,000 to $35,000
• Interest rates from 9.95% to 35.99% APR
• Terms of 2 to 5 years
• Minimum credit score of 580

Compare offers from multiple direct lenders to make sure you’re getting the most affordable rate for your finances. Avoid payday loans and predatory lenders seeking to take advantage of bad credit borrowers.

What to Watch Out for With Bad Credit Signature Loans

If you seek a signature loan with bad credit, keep these tips in mind:

• Only borrow what you know for sure you can repay. Avoid offers that seem too large for your budget.

• Read the fine print for the true interest rate and whether there are any hidden fees. Calculate the total loan