The 3 Secrets Every Bad Credit Personal Loans Borrower Should Know

The 3 Secrets Every Bad Credit Personal Loans Borrower Should Know

Did you know that the representative APR of a loan means that only 51% of successful applicants will be given that stated interest rate?

This is one of the lesser-known secrets of bad credit personal loans.

To make sure that you do not get caught out by the small print, we have compiled a list of 3 additional secrets of bad credit borrowing to make sure that you do not make a bad situation worse.

No.1 – Representative APRA red APR sign

Finance is jam-packed full of confusing terms and acronyms, and we would put the term ‘Representative APR’ right at the top of the list.

The majority of bad credit borrowers are resigned to only being eligible for expensive loans. This can lead to a very common mistake relating to bad credit loan advertising.

As we stated at the top of the article, where a loan uses the term ‘representative APR’, what they are actually saying is that only 51% of successful applicants will be given the stated interest rate.

Martin Lewis of provides a great example.“If a loan is described being available at 49.9% representative APR, then 51% of people accepted will get 49.9% APR, but 49% will get a different rate (very likely to be higher).”

Please Note – It is therefore absolutely essential that you understand that just because you see a particular interest rate quoted, does not mean that you will be eligible for the rate. For more information on representative APRs, please take a moment to check the following Wikipedia guide –

No. 2 – Payday Loans can cost more in a single month than credit cards do in a year!A payday loan application form

The majority of people believe that payday lenders charge interest on their loans. However, this is not always the case.

Many payday lenders typically choose to charge a fee instead of an interest rate.

For example, if you borrowed £100 for a month in the form of a payday loan, a standard fee for this would be approximately £30, resulting in the full payment equalling £130.

When you compare this figure to a standard credit card charging 19% APR, assuming that you did not miss any repayments, you would only be charged £20 on a £100 balance for a whole year!!

Please note – Ever wondered why payday loans are so expensive? Find out here.

No. 3 – Being a ‘good’ borrower can actually be a ‘bad’ thing!A good or bad choice

We all know that failing to repay loans on time can lead to trouble. This is especially so in the case of payday loans and therefore making sure you repay on time could not possibly lead to further trouble, could it?

Making timely repayments in full can still lead to potential issues. Because your payday lender will know that you are a good customer who repays on time, it will certainly be aware that it has made money from you. This inevitably leads to the next step – if it lends you more money, you are likely to repay again making them even more money!

A quick £100 loan to tide you over until your next payday is one thing. A larger loan is something different altogether. The larger the loan, the greater the chance of failure to repay and the greater the costs will be.

To explore payday loans in greater depth, take a moment to click on the following link which will take you to the Citizens Advice Bureau guide to payday loans.

Do you know what your credit file look like?An image of a credit score

Personal credit ratings play a pivotal role in loan eligibility. It is therefore always important to keep an eye on your credit rating.

By visiting one of the UK’s many credit reference, you will be able to access your all-important credit rating to gain some insight into whether you are likely to be in good standing with the UK’s financial lenders.

Did you know there are affordable bad credit loans?

It’s important to understand that whilst some bad credit personal loans are higher profile than others, some of the others can prove to be much cheaper. Guarantor loans are loans for any purpose and are much cheaper than other types of bad credit loans, including payday loans.

Clicking on the Loan Calculator below will allow you work out just how much you can afford to borrow and then filling in our easy to complete application form will allow you to simultaneously submit your form to a number of the UK’s best bad credit lenders resulting in a variety of instant ‘no obligation’ loan offers.

Jon Edward

Happily married with two wonderful girls. Love cycling, curry, and when I get the chance - loud music! See Jon's Profile Page

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