3 types of loan that you can get with bad credit
Need a loan quickly but have been let down by your credit rating?
There a number of great options that have been designed to cut through the application process for anyone who needs cash now.
Even better, regardless of your recent financial history, they may still be available to you!
With the available balance regularly available within minutes of submitting your application, let us help narrow the field by introducing 3 options currently available.
1. Logbook Loans
These offer an option for anyone looking for a secured loan that does not put their home at risk.
Typically advertised with the promise of fast cash and no credit check, they are available on both the High Street and the internet in sums of between £500 and £50,000, depending on the value of your car.
Note – Lenders will generally offer a sum of money worth up to 50% of the value of your vehicle.
How do they Work?
As opposed to offering your home as security against the balance of your loan, when you submit your application, your lender will ask you to hand over either the vehicle’s logbook or registration document, as proof of ownership.
You will then be asked to sign a legal agreement and a form called a ‘bill of sale’, which means that the lender will temporarily own your vehicle until the amount that you have borrowed has been repaid in full.
Once you have completed your repayments, the ownership of your vehicle will be transferred back into your name. However, if you fail to make all of the repayments, the lender will be quite within their rights to sell the vehicle and use the proceeds to recoup some of their losses.
Normally the agreed amount will be sent to you in the form of a cheque, which takes several days to clear. Some lenders offer a ‘fast cash’ service, but they may charge fees of up to 4% of the balance for this.
2. Text Loans
These are a fairly new innovation in the UK finance market and work by allowing the lender and the borrower to complete their application via text message.
Note – Because the application process is entirely paper-free (i.e. you do not have to print any forms and returning them via fax or post), the process will be far quicker to complete.
It must be noted that they can be very expensive. In the following article – “Text message loan service is a costly convenience” – the Guardian explores why convenience comes at a premium cost: Text message loans service is a costly convenience
3. Guaranteed Loans
Despite what the name suggests, these are loans that are guaranteed by another person, not one that you’re guaranteed to get!
These are normally the lowest APR of all poor credit loans.
They are separated from many of their counterparts by the fact that they require the borrower to have a second person acting as a guarantor.
Typically lasting between 12 and 60 months, you will generally be able to borrow anywhere between £1,000 and £15,000 regardless of missed payments, CCJs etc.
Family members and close friends are both popular choices to act in the role of a guarantor.
To find out more information, compare guarantor loans.
Do you know your credit rating?
These ratings play a critical role in the application process for many loans; however, until recently finding out a definitive score has proven to be more difficult than it should be.
- Despite there being a number of CRAs (Credit Reference Agencies) in the UK from which you can obtain your report, they are all likely to come back to you with slightly different information.
- For this reason, we suggest visiting Checkmyfile* to access the UK’s only multi-agency report to ensure that you obtain all of the relevant information.
*Free for 30 days, then for just £14.99 a month after, which you can cancel online at any time.
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