You can get a loan with a 400 credit score, but your realistic choices are car title loans, pawnshop loans, payday loans, or a loan backed by a co-signer, and every one of them costs far more than what borrowers with higher scores pay. A 400 sits deep in the “poor” range of the FICO scale, which runs from 300 to 850, and most banks and credit unions will decline you outright.1Equifax. What Are the Different Ranges of Credit Scores? The lenders who will say yes offset their risk with triple-digit interest rates, collateral requirements, or both. Before you sign anything, look at what each product actually costs, what federal law protects you from, and whether a lower-cost alternative fits your situation.
Why a 400 Score Closes Most Doors
FICO classifies scores between 300 and 579 as poor, and 400 is in the lower half of that band.2Experian. What Is a Good Credit Score? Lenders read it as a record of missed payments, defaults, collections, or a recent bankruptcy. Conventional personal loans and standard auto financing are effectively off the table. FHA mortgages, for example, require a minimum score of 500, so government-backed home loans are out too.
A narrower set of lenders specializes in deep-subprime borrowers and approves based on income, collateral, or a co-signer instead of your credit file. Approval is easier there. The price is everything.
Loans You Can Realistically Get at 400
Car Title Loans
A title loan uses your vehicle as collateral. You hand over the title, get a lump sum, and keep driving the car while you repay. Loan amounts usually run 25% to 50% of the vehicle’s value, and monthly finance charges of about 25% work out to roughly 300% APR.3Federal Trade Commission (FTC). What To Know About Payday and Car Title Loans Miss payments and the lender can repossess the car. The collateral is what makes approval easy; it’s also what raises the stakes.
Pawnshop Loans
Pawnshops don’t check credit. You bring in something of value, the pawnbroker offers a loan based on a percentage of what the item would resell for, and the shop holds it until you pay. Terms typically run 30 to 90 days, with monthly interest of roughly 10% to 25% depending on state rules. Fail to repay and the shop sells the item. Nothing about the transaction touches your credit report either way. Loan amounts are small, and the effective rates are steep.
Payday Loans
Payday loans are small cash advances, usually a few hundred dollars, tied to your next paycheck rather than your credit. The full balance plus fees comes due on your next payday, generally within two weeks. Fees that sound modest in dollars are enormous as annual rates: a common $15 per $100 borrowed works out to nearly 400% APR.
The real trap is rollover. If you can’t repay in full, many lenders let you extend the loan by paying only the fee, which does nothing to the principal. On a $300 loan with a $45 fee, rolling over once means you’ve paid $90 in fees and still owe the original $300.4Consumer Financial Protection Bureau. What Does It Mean to Renew or Roll Over a Payday Loan Repeat that cycle a few times and you’ve paid hundreds of dollars without touching the debt.
One detail that catches people out: payday lenders generally don’t report payments to the major credit bureaus, so paying on time won’t help rebuild your score.5Consumer Financial Protection Bureau. Can Taking Out a Payday Loan Help Rebuild My Credit or Improve My Credit Score? If you default and the debt goes to collections, though, the collector can report, and your score drops further.
Co-Signed Loans
If someone with good credit will co-sign, your options widen a lot. Their credit history carries the application, and you may qualify for a standard personal loan at rates far below anything a title or payday lender offers. The catch matters: the co-signer is fully on the hook if you don’t pay, and any missed payment lands on their credit report. Treat this as a last resort, and only if you’re confident you can repay.
Cheaper Options Worth Trying First
Credit Union Payday Alternative Loans
Federal credit unions offer Payday Alternative Loans (PALs) specifically to compete with payday lenders. Amounts run from $200 to $1,000, terms from one to six months, the APR is capped at 28%, and application fees can’t exceed $20.6MyCreditUnion.gov. Payday Alternative Loans You need to have been a member for at least one month, and rollovers are prohibited. That last rule is the whole point: it’s what keeps a PAL from turning into the trap a payday loan can be.
CDFI Small-Dollar Loans
Community Development Financial Institutions receive federal funding to make responsible small-dollar loans as alternatives to predatory products. Loans max out at $2,500, must be repaid in installments with no prepayment penalty, and carry a maximum APR of 36%. Lenders are required to report payments to at least one national credit bureau, so the loan actually helps rebuild your credit.7Community Development Financial Institutions Fund. FY 2024 Small Dollar Loan Program Application Instructions Underwriting looks at your ability to repay rather than your credit score alone. Finding a CDFI near you takes some searching, but the terms are dramatically better than any payday or title product.
Credit Builder Loans
A credit builder loan flips the usual structure. The lender deposits the loan amount into a locked savings account, you make monthly payments over a set term, and those payments get reported to the credit bureaus. When you finish paying, the money is released to you.8Federal Reserve. An Overview of Credit-Building Products It won’t solve an immediate cash crunch, but if the underlying goal is raising your score to qualify for cheaper credit later, this is one of the most effective tools available.
Secured Credit Cards
A secured card requires a refundable deposit, often starting at $200, which becomes your credit limit. You use it normally, pay each month, and activity reports to all three bureaus. Again, no cash today, but responsible use builds the record that makes future borrowing cheaper.
What These Loans Actually Cost in Dollars
Rates for deep-subprime borrowers look almost nothing like advertised personal loan rates. Mainstream online lenders top out around 36% APR, and that ceiling applies to fair-to-poor credit, not to a 400. What you’re actually looking at: title loans around 300% APR, payday loans near 400% APR, and pawnshop loans with monthly interest that can exceed 20%.3Federal Trade Commission (FTC). What To Know About Payday and Car Title Loans
Translate that into money. Borrow $500 through a payday loan at $15 per $100 and you owe $575 in two weeks. Roll it three times and you’ve paid $225 in fees alone: 45% of the original loan, gone in under two months, with the $500 still owed. Around 20 states cap payday and short-term loan rates near 36% APR. More than half still permit triple-digit rates.
Repayment schedules are short and inflexible. Payday loans come due on your next payday. Title loans often run 15 to 30 days. When longer terms exist, compounding means most of each payment goes to charges rather than principal. Calculate the total repayment amount before signing, not just the periodic figure.
Your Legal Protections
Required Cost Disclosures
Under the federal Truth in Lending Act, every lender has to disclose the APR and the total finance charge in writing before you sign, and those two figures must appear more prominently than any other term in the paperwork.9FDIC. V-1 Truth in Lending Act (TILA) If a lender won’t put the APR in writing, or steers your attention to the dollar fee while burying the annual rate, walk. APR is the only number that lets you compare loans on equal footing.
Military Lending Act
Active-duty service members and their spouses get stronger protection. Under the Military Lending Act, covered borrowers can’t be charged more than 36% APR on consumer loans, and that calculation includes application fees, insurance premiums, and add-on products. Lenders also can’t impose prepayment penalties or require you to waive your right to sue.10Consumer Financial Protection Bureau. Military Lending Act (MLA) If the MLA covers you, payday and title loans at triple-digit rates are illegal for any lender to offer.
Wage Garnishment Limits
If you default and a creditor gets a court judgment, federal law caps how much of your paycheck can be garnished. The maximum is the lesser of 25% of disposable earnings or the amount by which weekly disposable earnings exceed 30 times the federal minimum wage ($7.25 per hour, or $217.50 per week).11Office of the Law Revision Counsel. 15 U.S. Code 1673 – Restriction on Garnishment If your take-home pay is low enough, your earnings may be partially or fully protected. Some states set tighter limits.
Filing a Complaint
The Consumer Financial Protection Bureau accepts complaints against payday lenders, title loan companies, and other financial service providers. Submit through their website and they’ll forward it to the company and press for a response, generally within 15 days.12Consumer Financial Protection Bureau. Payday Loans Two things worth knowing: a payday lender cannot garnish wages without a court order, and you cannot be arrested for failing to repay a payday loan.
How to Spot an Advance-Fee Scam
Borrowers with low scores are the main target for loan scams. The most common version is the advance-fee loan: someone promises guaranteed approval no matter your credit, then asks for an upfront payment for “processing,” “insurance,” or “paperwork” before releasing funds. Pay, and the money and the lender vanish.13Federal Trade Commission (FTC). What To Know About Advance-Fee Loans
- Guaranteed-approval language. Phrases like “bad credit, no problem” or “no hassle, guaranteed” are hallmarks of scams. Real lenders evaluate you first.
- Upfront payment demands. Legitimate lenders may charge application or appraisal fees, but they don’t condition the loan on paying them in advance. If the fee “unlocks” your funds, it’s fraud.
- Phone-based pressure. Federal law makes it illegal for telemarketers to promise you a loan and collect payment before delivering it.
Before dealing with any unfamiliar lender, verify licensing. The Nationwide Mortgage Licensing System (NMLS) has a free lookup showing whether a company is authorized to lend in your state.14Consumer Financial Protection Bureau. Is There Any Way I Can Check to See If the Company or Person I Contact Is Permitted to Make or Broker Mortgage Loans? Your state’s financial regulator can also tell you about any disciplinary actions. Five minutes of checking can save you thousands.
What Happens If You Default
Losing the Collateral
On any secured loan, default means losing what you pledged. Title loan, that’s the car. Pawnshop loan, that’s the item. Most security agreements let a single missed payment trigger the lender’s right to take the property. Many allow a short grace period in practice; they don’t have to.
Collections and Credit Damage
Even lenders who don’t report during the life of the loan often sell unpaid debt to collection agencies. Those agencies do report. A collection account can drag your score down further and stay on your credit report for up to seven years. If a collector gets a court judgment, they may be able to garnish wages or place liens on property, within the federal limits above.
Tax on Forgiven Debt
If a lender cancels part of what you owe, the IRS generally treats the forgiven amount as taxable income. The lender is supposed to send you a Form 1099-C, and you report it on that year’s return.15Internal Revenue Service. Topic No. 431, Canceled Debt – Is It Taxable or Not? Exceptions apply for debt canceled in bankruptcy or when you’re insolvent (total debts exceed the value of everything you own). Forgiveness feels like a win until the tax bill arrives.
What You’ll Need to Apply
Even lenders who skip the credit score still verify that you can repay. Expect to provide:
- Proof of income. Recent pay stubs, bank statements showing regular deposits, or tax returns if self-employed. Many online lenders now verify income digitally by asking you to link your bank account through a secure service.
- Government-issued ID. Driver’s license, state ID, or passport.
- An active bank account. Most lenders deposit funds electronically and set up automatic repayment, so they’ll need your routing and account numbers.
- Collateral documentation. For a title loan, the vehicle title in your name, the VIN, and proof of insurance. For a pawnshop loan, just the item.
If a lender wants official proof of tax history, you can download transcripts free from the IRS website. A tax return transcript covers most line items from your original filing and usually satisfies lender verification.16Internal Revenue Service. Get Your Tax Records and Transcripts
How Approval and Funding Work
Online applications are straightforward. You fill out a form, authorize a credit pull (some run a soft pull for pre-qualification and a hard pull at final approval), and sign electronically. Many lenders run a quick employment verification before issuing final approval.
Decisions from online subprime lenders often come within hours. Standard funding is direct deposit, typically clearing in one to two business days. Some lenders offer same-day funding by disbursing to a debit card, though that may only be available in person. Storefront payday and title lenders can hand you cash or a check the same day. Electronic deposits are generally available by the next business day under federal funds-availability rules.17Consumer Financial Protection Bureau. How Long Can a Bank or Credit Union Hold Funds I Deposited?
Whatever you choose, read the entire loan agreement first. Look for the APR (not just the fee), the total repayment cost, any rollover or renewal provisions, and whether payments get reported to the credit bureaus. A loan that helps rebuild your credit while meeting a short-term need is worth far more than one that solves today and makes next month worse.