A bad credit loan refers to a fairly wide range of products that are designed for those people who have a bad credit record and therefore may struggle to get credit from a high street provider. Generally speaking, loans of this type will come with a higher interest rate or may require that you secure them against your home.
If you need a loan of £1,500 or more and have been unsuccessful with the high street lenders, you may find that you will have more luck with a bad credit loan specialist (https://www.clickfinancial.co.uk/bad-credit-loans/). If you need less than £1,500, you will probably find that the best way to raise the money will be via a credit card.
If you do find it necessary to apply for a bad credit loan, it can actually boost your credit rating as long as you manage it responsibly. If you prove that you can repay the loan on time and in full, you are likely to be eligible for more competitive rates in the future.
A personal loan is one of the most common types of bad credit loans, and normally involves taking out a loan of between one and twenty-five thousand pounds over a period of between one and seven years. The interest rate is generally fixed, making it easy to calculate exactly how much you will repay in total. Personal loans are sometimes referred to as unsecured loans.
Another type of loan is a guarantor loan, which essentially functions in the same way as a personal loan but is guaranteed by a third party. Should you default on a loan of this type, your guarantor will be liable to repay the loan in full.
A homeowner loan is different to a personal loan, as in this case you will put your home up as collateral to guarantee your repayments. This means that you will most likely be able to borrow a more significant sum of money. However, your property may be repossessed if you find you are unable to repay the loan. Interest rates tend to be variable on this type of loan, and you can repay the debt over a period of up to twenty-five years.
You may be looking for a bad credit loan that you can use to consolidate all your existing debt. This can help to simplify your finances, with just one repayment to one creditor per month. However, you need to ensure that the interest rate you are eligible for is low enough to make the consolidation worth your while. Don’t forget to check the small print of your current loans and other credit products for any early-redemption charges that you may be liable for should you decide to consolidate.
Whatever form of loan you opt for, the interest rate you qualify for will be dependent on your credit history, among other factors. You will not normally know the rate of interest you will get until you actually start the application process. This is relevant, because applying for multiple loans will adversely affect your credit rating.