Compare Bad Credit Personal Loans

What is a bad credit loan?

If you have a poor credit history and you’ve ever applied for a loan from a bank or other credit lender, it’s more than likely that you’ve been refused. But you can locate providers who offer unsecured loans for people with a poor credit rating and a poor credit history.

These providers will be aware of your credit history, but they are specifically interested in whether you can pay back the loan under current financial circumstances. The real issue with providers who offer unsecured credit loans is that they typically attract higher fees.

Obtain an unsecured loan even with a poor credit rating

The reality is that anyone can find themselves in a situation where they get a bad credit rating.  One default on a bill, loan or line of credit is all it takes to affect your credit standing for up to a five year period. Fortunately there are loan products available for people who have had previously found themselves with an impaired financial record. These products are tailored specifically people with different circumstances.

How to secure a bad credit loan

Bad credit loans are available from a number of lenders who understand that mistakes of the past should not impair you many years into the future.  To secure a bad credit loan you should:

  • Find a lender that offers bad credit loans
  • Review their product offerings and the eligibility requirements for each loan
  • Examine what you need to provide in order to apply for the loan, and then identify the fees and terms of conditions of the loan
  • Compare lenders and loans to make sure that you are identifying the best deal


Keep the following in mind:

  • Check eligibility criteria before applying for the loan: Most credit providers have a set of firm eligibility criteria that you should check. Oftentimes these are listed on the provider’s website. If you have questions about your eligibility, it’s important to call them before applying.
  • Be sure of your credit history: Many people don’t know the state of their credit history, so it’s important to look at your credit file fo r atrue reflection. Creditors and lenders will always take this into account when deciding on whether to approve a personal loan. Your credit history details can be ordered for free in Australia from credit reporting agencies.
  • Compare providers: It’s a good idea to compare credit providers before applying since every credit application made is recorded as part of your credit history. For many lenders, more than one consecutive application can be a red flag indicating a rejected credit application.

Fortunately, most lenders process applications quickly, so you will not need to wait too long to check your eligibility.


What types of bad credit loans are available?

If you have bad credit and need a personal loan, then finding a provider that offers and unsecured loan might just be the answer to your problems. As long as you are an Australian citizen, have a bank account and can pay off the loan, you are eligible for an unsecured personal loan. Filling out an online application form is quick and easy and will not require you to provide further documentation. Be aware that many unsecured credit loans attract high fees.

If this type of loan is of interest, then you might want to consider the following different types of unsecured credit loans:

Payday Loans

These are short terms loans designed to cover short term expenses, just as regular payday money would cover weekly bills. Borrowing is typically limited to between $100 and $2000, and the repayment terms are limited to anywhere between 16 days and a few months.

Debt Consolidation Loans

This kind of loan is intended for people looking to consolidate their debts into one single debt so that repayments are lower.

Line of Credit

This is similar to a credit card in that you can draw on a line of credit anytime up to a limit whenever you need money. This makes it flexible and convenient.

Cash Advance

This applies to those who already have a credit card. When you draw cash out of a credit card using an ATM you are receiving a cash advance loan.

Compare bad credit loans

In order to compare one bad credit loan against another, you need to find a set of data upon which you can make the comparisons.  Look at things like fees, flexible repayment options, lender reputation in the marketplace, and interest rate.

What are the fees?

When you are considering a bad credit loan you should always examine the fees and charges.  Try to identify if there are fees for opening the loan, making earlier or extra repayments, or monthly fees for the life of the loan. Generally speaking you should expect that:

  • A bad credit loan for between 16 days and 12 months and for no more than $2,000 will not cost you more than a 20% establishment fee and a 4% monthly fee,
  • A bad credit loan for the same period and for an amount between $2,001 and $5,000 will not incur more than a $400 establishment fee and a $48% p.a. rate.


Having said that though, these are general expectations and you should always double check any contracts for a line of credit or loan before you proceed.

Can you make additional repayments or extend the life of the loan?

Before deciding a lender or a specific loan, you should look at whether the loan is flexible enough to allow you to make extra repayments or if they offer a facility for you to extend the loan should you find that you need the funds for an additional short term period.

How much do you know about the lender?

Doing some research about the lender you are considering is vital. There are a high volume of smaller lesser known lenders who might offer excellent rates but do not disclose the myriad of fees and conditions attached to their product offerings.  You should find lenders that have a good reputation in the market and readily provide information about the loans upfront. To give yourself piece of mind, it never hurts to compare several lenders just so you know that a great deal is not too good to be true.

What is the interest rate?

If you take out a loan for an amount less than $2,000 you should not expect to have to pay any interest. But you should expect to pay fees and hefty ones at that.  Lenders who provide funds to someone with an impaired credit rating are in fact taking a risk particularly where the loan is unsecured, meaning there is no asset for them to sell if the loan is not repaid. To mitigate this risk they charge high fees to cover themselves.


Benefits of a bad credit loan

Unsecured bad credit loans offer the following benefits and features:

  • Convenient application: Most lenders who offer unsecured credit loans make it easy and quick to apply through online application forms that usually require no additional documentation or other credentials.
  • Choice: If you have poor credit and cannot secure a regular personal loan, a bad credit loan will offer you a credit lifeline. They are also a good way to consolidate debts and lower your repayments.
  • Access: Because approval turnaround is usually very fast on unsecured loans, you typically have access to money on the same day, or the next business day at the latest.
  • Repayments: Paying the loan off is made easier because the lender will usually schedule direct debit repayments according to your normal pay schedule. This means that you don’t need to remember to manually pay.


Things to avoid with bad credit unsecured loans

Financial institutions don’t just hand out money without attaching a range of fees and conditions to their loans.  If you find a lender or loan product that seems too good to be true then it probably is.  For this reason when searching for a bad credit loan there are some things you need to watch out for:

  • Non-mainstream lenders that offer loans with low interest rates but do not disclose fully all the terms and conditions, meaning that you could sign up to a loan that is inflexible, does not allow early repayments, and has a closure / finalisation fee,
  • Reconsider bad credit loans of up to $5000 as they have a shorter repayment period and high fees which can make it hard for you to meet the repayments, and also mean that you are paying a lot for the privilege of accessing the funds,
  • Mainstream financial institutions are regulated to provide comparison rates when they publish and promote a loan product. This rate tells the potential applicant the rate they will be paying for the loan per annum which is inclusive of interest and fees and charges. Smaller lenders are not required to publish this comparison rate so the rate they publish may not give you an accurate comparison against mainstream lender rates meaning that you will get caught out over the life of the loan paying fees higher than you expected.


Commonly Asked Questions

In order to secure a bad credit loan you will need:

  • To be 18 + years of age,
  • To provide evidence of regular income, including any Centrelink payments,
  • To provide a list of assets and debts (or expenses) that you have repayment commitments for.
Many lenders provide online facilities where you complete your personal details within an internet based form. They will also provide a facility for you to attach a scanned copy of your employment or Centrelink income.
Once you submit your application you should receive an immediate response to confirm that the lender has received your information.  The response may indicate when you can expect to hear back from them to indicate if you have been approved, if they require further information, or if your application has been declined.
Every lender is different but you will usually hear about the outcome of your application within a day or two.
Most lenders will use 128-bit SSL encryption.  This is indicated by a small locked padlock visible in the browser URL or at the bottom of the web page frame.  If you don’t see a padlock at all, or a padlock that is unlocked, then you should refrain from sending any documents through, and instead make contact with the lender by phone or email.
In the event that you find yourself unemployed then you will need to prove to the lender that you can service the loan. If you are a recipient of Centrelink payments then you may still be eligible for a loan, however it is likely that you will not be able to borrow as much as if you had a regular paying job.
As outlined earlier in this report, if you have an impaired credit history such as a default or missed repayment then you will be overlooked by major lenders.  There are however some smaller reputable lenders that will still consider your application. The key is doing your homework so you find a reputable lender and the right product for your needs.