Let’s be real — having less-than-perfect credit can feel like a closed door when you need a loan.
But don’t stress. Whether you’re trying to consolidate debt, cover an emergency or just need a little breathing room, there are solid personal loan options out there for people with bad credit. In fact, 2025 has brought some refreshingly flexible lenders into the spotlight.
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Andrew Lokenauth, money expert and owner of BeFluentInFinance, has spent years helping clients navigate the tricky waters of bad credit loans. “And let me tell you — there’s way more options than most people think,” Lokenauth explained.
Working with hundreds of clients has taught him some insider tricks about getting approved, even with credit scores in the 500s. Below are the best ones to help you get the funds you need, even if you have bad credit.
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Secured Personal Loans
First up, secured personal loans are your best bet. Lokenauth tells his clients to consider using their car or savings as collateral.
Last month, he helped a client get a $10,000 personal loan at 8% interest by securing it with their paid-off vehicle — way better than the 25% or more they were looking at with unsecured options.
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Credit Union Loans
Credit union loans are absolute gold mines for bad credit borrowers.
Most people don’t know this, but credit unions are non-profit and typically offer rates about 2% to 3% lower than traditional banks.
“I’ve gotten dozens of my clients approved through credit unions, even with scores around 580,” Lokenauth said.
Peer-To-Peer Lending Platforms
“Let me share something about peer-to-peer lending platforms like Prosper and LendingClub,” Lokenauth said.
He noted these platforms can be fantastic for bad credit. He’s seen approval rates roughly 60% higher than traditional banks. Plus, their rates tend to be more competitive.
Home Equity Loans
Home equity loans are another solid option if you own property. According to US Bank, they can be used for more than renovating or fixing your home, including paying for college, consolidating debt and more.
The interest rates are typically 4 % to 7% lower than unsecured loans because your house acts as collateral. But here’s the thing — you have to be super careful with these.
“I’ve seen too many people risk their homes by defaulting,” Lokenauth said.
Co-Signed Loans
Co-signed loans are another effective route.
Having someone with good credit co-sign can drop your interest rate by 5% to 10%. But — and this is crucial — make sure you can make the payments.
“I’ve seen countless relationships destroyed over defaulted co-signed loans,” Lokenauth added.
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This article originally appeared on GOBankingRates.com: 5 Best Personal Loans If You Have Bad Credit in 2025
