People with bad credit often have a hard time getting approved for a loan especially from major banks and lenders. This is understandable considering the borrower’s poor credit history. There’s too much risks involved on the part of the lender that you’ll probably get your application rejected if you have bad credit. In this case, bad credit loan options may come in handy.
Bad credit loans, as its name suggests, exist to cater to people with bad credit. There are different types of bad credit loans available in the market and below are some of the most common options you can check out.
Payday loans are popular in the UK and for good reason. If you are employed and you suddenly need quick cash, payday loans offer a convenient solution to your financial emergency. It’s convenient because approval is fast and the requirements minimal. So long as you can provide proof of income, your application is as good as approved. You can borrow from £100 up to £1,000, which you can repay on your next paycheck. On the flip side, the loan is astoundingly costly at 1,000 representative APR on average.
Doorstep loans are personal loans for people with bad credit. The offers usually start from £100 up to £1,000 or maybe more depending on your financial situation. Like payday loans, the attraction of this type of loan is its offer of convenience not to mention the quick, hassle-free cash when you need it most. The loan is brought directly at your doorstep hence the convenience. If you meet the requirements and you want to apply for the loan, you can get approved in 24 hours or less.
Guarantor loans are not as easy to get approved for as the other two loans above but this one offers larger loan amounts. With guarantor loans, you can usually borrow from £500 up to £7,500 or sometimes £10,000. But in order to get approved, you need to meet one key requirement. You need to provide a guarantor who will agree to co-sign the debt agreement with you. And it’s not just any guarantor. The guarantor must be of legal age, a UK resident who is a homeowner and he or she must have good credit. If you can find a guarantor, you’re in luck because then you’ll be able to enjoy this type of loan’s lower interest rate.
If you need a larger amount of money for a financial emergency or any major personal need, logbook loans may be the best option for you. Unlike the other loans, this one is a secured loan that involves your vehicle as collateral. This means you can borrow more, usually from £500 up to £50,000. But the flip side is you’re risking your vehicle to repossession in case of missed payments. You can lose your vehicle, which means extra caution is needed if you’re going to opt for this type of loan.
Peer to peer loans
Peer to peer loans are another type of loans that are becoming more and more popular in the UK. Rather than go to banks to take out a loan, you can go online instead and borrow directly from a “peer.” The peer is your borrower, which means no middleman. The interest rates are usually lower than most types of bad credit loans. Most lenders in this platform, however, may require you to have good credit to be eligible for a loan. Fortunately, there are some who understands your situation who is still willing to lend you money even with bad credit. Your job is to look for those lenders in order to raise quick cash.