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How to Get a Private Loan With Bad Credit

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Readers ask if it’s possible to get a private loan with bad credit. It depends who you borrow from. If you do a private loan with somebody you know, the answer is yes - as long as they’ll lend to you. If you’re looking for private student loans and you have bad credit, it’s not as easy.

When You Know the Lender

Doing a private loan with somebody you know? Anything is possible. They get to decide whether or not your bad credit is an issue. Friends, family, and peer to peer lending services can all help you borrow money with bad credit.

If you do a private loan, make sure you do it right. There are legal, tax, and relationship issues to manage. The best way to handle a private loan (whether you have bad credit or not) is to document it.

Private Loans from Strangers

Getting a private loan with bad credit is difficult. If you don’t have a lender, you’re less likely to qualify for a loan and you’ll pay more. Peer to peer lending services may work, but many of them require decent credit. You’ll improve your chances if you have a compelling story for lenders. Work on building credit, and also consider small banks and credit unions.

Private Student Loans

Private student loans are unique. If you’ve already exhausted government sponsored loan programs, you may want to use private loans designed for students. They can have more favorable terms than other loans, but they’re rarely as friendly as government sponsored programs (see Advantages of Federal Student Loans). There are also some P2P lending services that specialize in student loans and help you build credit at the same time.

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