A low credit score can feel like a roadblock when you urgently need financial help. Traditional banks often reject loan applications from borrowers with bad credit history, leaving many people frustrated. But don’t worry—there are still options available.
From secured loans against collateral to instant personal loans for bad credit, and even government-backed financial products, you can still borrow money at reasonable terms. This guide will cover everything you need to know about the best loans for bad credit in India 2025, including eligibility, interest rates, lenders, and strategies to improve your creditworthiness.
1. Best Loan for Bad Credit in India
The best loan for bad credit in India usually comes in the form of secured loans. Banks and NBFCs are hesitant to give unsecured loans to borrowers with poor repayment history, but collateral-based loans (like gold loans, property loans, or FD loans) are easier to get approved.
2. Personal Loan for Bad Credit in India
Some NBFCs and loan apps still offer personal loans for bad credit borrowers at higher interest rates. While traditional banks may decline, fintech platforms use alternative credit assessment methods (like income stability, cash flow, or digital footprint) to approve small-ticket personal loans.
3. Instant Loan for Bad Credit Without CIBIL
If your CIBIL score is below 650, some lenders still offer instant loans without CIBIL check. These loans are based on your current income, Aadhaar verification, and bank statements. However, the interest rates may range between 18% to 36% p.a.
Examples: KreditBee, PaySense, CASHe.
4. Secured Loan for Bad Credit in India
A secured loan for bad credit is the safest option to get approval. You pledge collateral such as property, gold, fixed deposits, or insurance policies. Since the lender’s risk is lower, you can get larger loan amounts at lower rates compared to unsecured loans.
5. Gold Loan for Bad Credit Borrowers
Gold loans are one of the easiest loans for bad credit borrowers. Since your gold jewelry (18–24 carat) is pledged, CIBIL score is not a primary factor.
- Loan Amount: ₹20,000 – ₹1.5 Crore
- Interest Rate: 7% – 12% p.a.
- Fast disbursal within minutes
Examples: SBI, HDFC, Muthoot Finance, Manappuram.
6. Loan Against Property for Bad Credit in India
If you own residential or commercial property, you can get a loan against property (LAP) even with bad credit.
- Loan Amount: ₹5 Lakhs – ₹5 Crores
- Tenure: 10–15 years
- Interest Rate: 9% – 14% p.a.
7. Credit Card Loan for Bad Credit Score
If you hold a credit card, you may be eligible for a credit card loan despite having a poor score. Lenders consider your repayment history on that specific card rather than the overall CIBIL.
8. Payday Loan for Bad Credit in India
Payday loans are short-term emergency loans available through NBFC-backed apps.
- Loan Amount: ₹2,000 – ₹50,000
- Tenure: 15–90 days
- Interest Rate: Higher (20% – 36% p.a.)
- Risk: Use only for urgent needs
9. Online Loan for Bad Credit in India
Fintech platforms like MoneyTap, KreditBee, and Navi specialize in online lending. They provide online loans for bad credit with paperless approval. Disbursals are done within minutes once verified.
10. Emergency Loan for Bad Credit in India
In situations like medical emergencies, lenders often relax CIBIL requirements. NBFCs and loan apps provide emergency loans for bad credit borrowers with instant approval.
11. Government Loan Schemes for Bad Credit Borrowers
Government-backed loans for farmers, students, women entrepreneurs, and small business owners are more flexible with credit requirements. Schemes like Mudra Loan, Stand-Up India, and PMEGP may support individuals even with low credit scores.
12. Loan Apps for Bad Credit in India
Top apps offering loans for bad credit include:
- KreditBee
- PaySense
- CASHe
- Dhani
- LazyPay
13. Business Loan for Bad Credit in India
Entrepreneurs with poor credit history can still apply for business loans from NBFCs and government-backed schemes. Many lenders focus more on cash flow and revenue than credit score.
14. Car Loan for Bad Credit in India
Car loans are possible for bad credit borrowers, but usually with:
- Higher down payment requirement
- Higher interest rates
- Shorter tenure approval
15. Home Loan for Bad Credit in India
Home loans are difficult to get with bad credit, but not impossible. Some banks approve if you have a co-applicant with good credit, or if you pledge higher collateral.
16. Compare Bad Credit Loan Offers Online
Before applying, always compare bad credit loan offers online using portals like PaisaBazaar, BankBazaar, and PolicyBazaar. This helps you find lower interest and better repayment options.
17. EMI Calculator for Bad Credit Loans
Always calculate affordability using an EMI calculator. Example:
- Loan: ₹1 Lakh
- Tenure: 12 months
- Interest: 24% p.a.
- EMI: ~₹9,500
18. How to Improve Credit Score for Loan Approval
If you want better loan deals in the future:
- Repay EMIs on time
- Maintain low credit card utilization
- Avoid multiple loan applications
- Monitor credit report regularly
Case Studies / Examples
Example 1:
Rahul had a CIBIL score of 580. He pledged his gold jewelry with Muthoot Finance and got ₹5 Lakhs at 10% p.a., which he repaid in 12 months, improving his credit score.
Example 2:
Priya, an entrepreneur with poor credit history, secured a Mudra Loan under the government scheme to expand her bakery business. This helped her grow revenue and rebuild her financial credibility.
FAQs on Best Loan for Bad Credit
Q1. Can I get a loan with a CIBIL score below 600?
👉 Yes, but mostly through secured loans like gold loan, property loan, or NBFCs.
Q2. Which is the best loan option for bad credit borrowers?
👉 Gold loans and loans against property are the most reliable.
Q3. Are there government loans for bad credit borrowers?
👉 Yes, schemes like Mudra Loan, Stand-Up India, and PMEGP are available.
Q4. Do instant loan apps give loans without CIBIL check?
👉 Yes, apps like KreditBee and PaySense offer loans based on income proof instead of credit score.
Q5. Can I improve my credit score while repaying a loan?
👉 Absolutely. Timely repayment of any loan helps improve your score.
Conclusion
Getting a loan with bad credit in India 2025 may be challenging, but not impossible. The best loans for bad credit include gold loans, loans against property, and NBFC-backed instant loans. Government schemes also provide relief to specific groups.
