May 10
It is becoming increasingly more apparent that if you have a poor credit rating then you are going to find it difficult to obtain a loan from a bank. However this is not to say that individuals with less than desirable credit histories will not be eligible for loans elsewhere. A type of loan called a Bad credit Loan has been designed as a loan for people with bad credit.
Bad Credit Loans act similarly to a standard loan from a bank with a few key differences that you should take in to consideration before applying for one. The amount Bad Credit Loans will typically be for will range between £1000 to £25000 although some brokers boast amounts as high as £75000. The term lengths are similar to that of standard loan too, ranging from around 12 months to 60 months.
Bad Credit Loans are typically secured as these types of loans expect some type of collateral like a car or a house to be secured against them. The reason behind why Bad Credit Loans are almost always secured is because Bad Credit Loan lenders are taking out a higher risk when lending to people with poor credit scores. Because of the higher risk that Bad Credit Loans lenders are taking with people with poor credit the interest rates tend to be higher than that of a standard loan from a bank. It is therefore vital that you work out what the repayment plan will cost when you are considering a Bad Credit Loan as the higher interest rates will make it fairly expensive. If you cannot make the repayments and your house or car is secured against the loan then you could face repossession.
May 01
Details of Bad Credit Loans
If you’re sure that your application for regular unsecured and secured loans including credit cards will not be approved then it might be worth applying for a bad credit loan. There are numerous companies who will offer bad credit loans to customers who have been rejected elsewhere and one way of finding such a company is by going through a specialised broker. They will take your requirements and details and look to a large panel of lenders to see which one would be best suited to your needs and is willing to lend to you. These bad credit loan brokers are already familiar with the market so the search won’t take long, and soon they will return with an offer. If you are happy with the loan being offered you can proceed
Criteria can vary broadly according to company and loan type, but in general you will need to be at least 18 years old, employed or self employed, a UK resident and a home owner. It is difficult to be more detailed than this because the lenders all have different criteria. Some might need you to be in full time employment and others may require ‘sensitive information’ from you in order to proceed your application
Risks associated with loans for people with bad credit
As with all types of borrowing, there are risks associated with bad credit loans. If you have bad credit the lender takes on a higher level of risk lending to you so the interest on bad credit loans may be higher than normal – and therefore the repayments are higher. You will need to be certain that you can cover repayments. Some bad credit loans are secured against your home so be careful.. If it is your home at stake, you stand to lose a great deal – and could end up with an even worse credit rating.
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