Get a $5,000 Personal Loan With Bad Credit
July 31, 2023Table of Contents Contents
Why the banks decline you
Rejection hurts. If you’ve ever gone to a bank to apply for a loan, and then had the big red NO stamped on your application, you know that gut-sinking feeling. Most of the time applicants are denied loans because they have a negative credit score. If you were unsuccessful in obtaining a loan, it might be because you have bad credit too.
Credit scores range from 300 to 900. The table below provides a general guide on how credit score ranges relate to different levels of credit health.
You can find more information on our blog about credit scores, how they are calculated and what they mean. But generally speaking, a score between 300-559 is considered “poor,” while 560-659 is in “fair” territory. Anything above that and you shouldn’t experience any trouble getting a loan. You can find out your credit score for free with Borrowell.
Bad Credit Loans
Getting a personal loan with bad credit isn’t as difficult as you may think, but it can be expensive. You likely can’t get these types of loans at a traditional bank, but alternative and online lenders will offer them. The process works like any other loan, except it can usually be done completely online.
What makes it so expensive is the interest rates. Because the risk to the lender is higher, they charge more. These types of loans are great if you need to build your credit score. Plus, you can always refinance them once you’ve had them for a while and save some money on interest.
Getting a Loan Online Fast
The great thing about online lenders is that they can get you your funds faster. While it’s a great option for those who have bad credit, it’s always an option for those who don’t. Many lenders can get you money much faster than the banks. With Spring Financial, we work with all kinds of credit scores and can get you money as soon as the same day.
What’s considered sufficient income for a personal loan?
While banks rely heavily on your credit score, some lenders will look at other factors such as your employment and income. If you have sufficient income to pay back the loan, it's easier to get approved for a loan today than it ever was. Every financial institution will have its own requirements, but typically, a minimum income of $1,200 per month before taxes or deductions (i.e. CPP, EI, etc.) is needed to qualify if you have bad credit.
To put your income requirements into perspective, here’s a breakdown:
|
Weekly Income: |
At least $285 per week (before deductions) |
|
Bi-weekly Income: |
At least $570 every two weeks (before deductions) |
|
Monthly Income: |
At least $1200 per month (before deductions) |
If you don't earn the minimum amount required to get approved, there are other ways that you can boost your chances of getting the loan you need.
How to get a $5K loan with bad credit
Today, trusted online lenders leverage e-transfer technology to make loans more accessible than ever! If you need cash in a hurry but have bad credit, here are a few tips to help you get approved without delay:
Total time:
- 5 Minutes
What you’ll need:
- Proof of Employment
- Bank Statements
- ID
- Mobile Phone
Find a lender that can help
If you’re approaching lenders with a bad credit history, find one that specializes in working with clients such as yourself. Know what the lender’s eligibility criteria is before applying because it varies among financial institutions. Credit unions, for example, can be more stringent about who they lend to versus a lender like Spring, that can work with customers of all backgrounds and financial situations.
Show your income
When it comes to fast-tracking ways to get that personal loan, here’s a key phrase to remember: know and show your income. As mentioned, applicants typically need a monthly income of $1,200 to qualify for a $5,000 loan. If you’re not sure about your income, check your bank statements and pay stubs to get an accurate figure. If you’re coming up short, don’t forget to include whatever government income you are receiving. It usually counts towards your monthly income. And you can prove your income by taking photos of any non-sensitive documents with your smartphone and sending them via email. Now that's convenience!
Do you have a cosigner?
If you’re under that $1,200 monthly income threshold (including any government income you receive) then you may need to find a strong cosigner. A cosigner is a trusted friend or family member who agrees to share the responsibility of your loan. The cosigner should have a decent income and a good credit score.
Can you offer collateral?
In some instances, a lender might be willing to accept collateral to secure your loan application. Examples of collateral would be the title of your car or possibly home equity if you have it. This is not advisable and should only be considered in emergency situations. Remember you are putting a valuable asset at risk, and if something goes wrong and your ability to repay the loan is compromised, you could lose that asset.
How does a loan help improve bad credit?
Once you know what your monthly payments are going to be, you should ensure that you're able to make all your payments on time before you sign anything. You might even consider automating your payment so you don't even have to think about it.
As you pay back your loan, your credit can go into positive territory. In fact, you can see it improved in as quickly as 30 days!
Monthly installments on a personal loan of $5,000 can help you build back your credit rating. But it’s key that you make payments on time. Here’s why:
- Payment history proves reliability. Prompt payments on a loan show you’re responsible and not a loan risk. Lenders will look at this behaviour favourably and you will be successful in future loan applications. Important note: payment history makes up 35% of your credit score.
- It pays to use less credit. Another 30% of your credit score comes from what is called credit utilization. This essentially means the less credit you use, the less risky you are as a borrower. If you took a $5,000 loan and used it to pay off a high-interest credit card, it would improve your credit utilization.
Guaranteed Approval Loans With Bad Credit
Getting approved for a bad credit personal loan can be a slightly difficult process because it’s hard for lenders to give you money if there’s no indication that they’ll get their money back. That said, if you are looking for a guaranteed personal loan, the most likely way to do that is with a secure loan. With secured loans, lenders have an asset they can seize if repayments aren’t made.
If a company is offering a personal loan guaranteed without a lot of strings attached, that’s a big red flag. When it comes to personal loans, there are a lot of companies out there that aren’t legitimate so you have to be careful. If it seems too good to be true, chances are it is.
Instant Approval Loans
When it comes to instant approval loans, that’s a little bit different. Once a lender performs a credit check, they have a pretty good indication of if you’ll get approved for the loan or not. Oftentimes, you’ll get something known as a pre-approval. This will tell you if you’re approved for a loan or not. What it doesn’t tell you is the among of the loan or the interest rate. This takes the guesswork out of getting a loan and helps you get your funds faster.
Get approved for your personal loan today
Spring Financial helps customers of all credit backgrounds and income levels get approved for a personal loan. Even if you have bad credit, Spring Financial will work with you to get a loan that meets your budget, while helping you rebuild credit. It’s easy, convenient, and FREE to apply.
Frequently asked questions about Spring Financial
Does Spring Financial offer loans over $5,000?
Absolutely. Spring Financial leverages cutting edge technology and can wire between $500 and $35,000 to your bank account within 48 hours (get up to $10,000 e-transferred within 24 hours). Simply go to our application page and select the amount you wish to get funded.
Is Spring Financial a payday loan lender?
No, Spring Financial offers flexible personal loans that are much more affordable than payday loans. Our loans have no hidden fees and don’t run on short repayment periods that could potentially trap you in a cycle of debt.
Does Spring Financial do credit checks?
Yes, credit checks are conducted but that doesn’t mean you can’t get approved if your credit is less than stellar. From bad credit to no credit, Spring Financial works with people in all sorts of credit situations to ensure they get the funding they need.
Tip: Be wary of lenders promising guaranteed approval and no credit checks – both are early warning signs of predatory lending.
Does Spring Financial offer secured or unsecured loans?
Spring Financial provides both, however, secured loans are not recommended because it’s risky to put collateral on a personal loan. If you use your car or home to get a secured loan, they could be taken away if you end up defaulting. Unsecured loans are a better option because they aren’t tied to anything so there’s no risk of losing a valuable asset.
How long does it take to get approved for a $5,000 loan?
In most cases, you can get approved and see funds e-transferred straight into your bank account in less than 24 hours. Spring Financial works fast because it’s a direct lender, allowing you to skip the middleman and make the loan process quicker.
What are loan repayment terms like?
Unlike short payday loan cycles or loans with prepayment penalties, Spring Financial offers flexible repayment plans so you can choose a term that works for your budget and schedule. Pay off your loan in as early as nine months or take up to five years, the choice is yours.
Can a loan from Spring Financial help me rebuild credit?
Yes! Spring Financial reports loan repayments to Canada’s two main credit bureaus, Equifax and TransUnion, so you’ll see your credit score increase if you make all your payments on time.
Is Spring Financial safe to use?
Headquartered in Vancouver, Spring Financial is a trusted lender that uses state-of-the-art security technology to keep your sensitive data under lock and key. Live representatives are also ready to assist you 24/7 over telephone, text, and e-mail.
How do I apply for a $5,000 loan with poor credit?
Gather the essential documents (i.e. proof of income, bank statements, ID, etc.) and then apply online in just 3 minutes! You can also submit an application over the phone by calling 1-888-556-6441.
