Having bad credit can make it difficult to get approved for a loan, but it’s not impossible - even in California. If your credit score is below 580, which is considered poor or bad credit, don’t worry. There are still options available for bad credit loans in California.
In this guide, we’ll cover:
Bad credit loans are loans designed for borrowers with poor credit scores, typically below 580 on the FICO scale. Because borrowers with bad credit are considered higher risk, these loans often come with higher interest rates and fees.
Some common types of bad credit loans include:
The loan amounts, repayment terms, and interest rates can vary widely between these different types of bad credit loans.
In California, the most common options for bad credit loans are:
Many online lenders and some banks/credit unions offer personal loans for borrowers with bad credit. While rates will be higher, personal loans are a safer option than payday or title loans. You can get a 3-5 year term to repay the loan in fixed monthly installments.
Payday loans are legal in California but highly regulated. State law caps the fees at 15% of the loan amount, with a maximum loan of $300. While easier to qualify for, payday loans come with very high APRs and short repayment periods, usually 2-4 weeks.
If you own your car outright, you can potentially get an auto title loan using your vehicle’s title as collateral. However, these loans also have very high-interest rates and short terms. If you miss payments, the lender can repossess your car.
Here’s a quick comparison of typical interest rates and loan terms for different types of bad credit loans available in California:
| Loan Type | Typical APR | Loan Amount | Repayment Term |
|---|---|---|---|
| Personal Loan | 20-36% | $1,000 - $50,000 | 2-5 years |
| Payday Loan | 460% (15% of $300) | $300 max | 2-4 weeks |
| Auto Title Loan | 200% - 300% | Up to $5,000 | 1 month - 1 year |
As you can see, payday and auto title loans have exorbitantly high interest rates compared to personal loans. They can quickly become unaffordable debt traps.
Pros:
Cons:
If you need to get a bad credit loan in California, follow these tips:
If you can’t get approved for a reasonable bad credit loan, or want to avoid the high costs, consider these alternatives:
While bad credit loans can provide fast access to cash when you need it most, they come with significant downsides like high costs and risky terms. Always exhaust other borrowing options first, like getting a co-signer or working with a credit counselor.
If you must take out a bad credit loan in California, avoid payday and auto title loans at all costs. Stick with reputable personal loan lenders that provide fixed rates and reasonable repayment terms.
Above all, have a solid plan for repaying the loan on time. Making late payments will only worsen your credit situation. With some budgeting and discipline, a personal loan can be used to improve your credit score over time.