5 Loans You Can Get With a Bad Credit Rating
If you have a bad credit rating, don’t fret, there are still options for you to borrow money, but some better than others!
In the article below, we highlight the 5 best options for borrowers with a bad credit rating.
Option 1: Friends or family
Undoubtedly one of the potentially cheapest ways you can get a loan with a bad credit rating is to borrow money from a friend or family member.
People are often though not keen on doing this, for maybe it’s embarrassing, or you are worried that it may cause future difficulties.
But if you think there is a friend or family member who may have the money and trusts you enough to lend, then how you actually ask them for the loan is very important; see our 5 steps below:
- Have a good reason for needing the money – people are much more sympathetic to genuine reasons such as a broken-down car rather than for some new designer clothes!
- Know exactly how much you need to borrow and what you can pay back and when. If for example, you go to them saying you need to borrow £400, and that you can afford to pay this back over 10 weekly instalments of £40, they will see that you have thought about it.
- Offer an interest payment. If you were going to get a loan from another lender you would have to pay interest, so it’s only fair that you offer them interest on top of the loan. So rather than paying back £40 per month over 10 weeks, say offer £42 per week?
- Have a written agreement. We’re not suggesting you have to get a full loan agreement in a place like a bank, but a simple dated confirmation of amount you are borrowing and when you are going to pay this back will do the trick. When things are put in writing, this gets rid of confusion and reduces any potential risk of future falling out.
- Payback as promised. Last but not least, make sure you pay back exactly what and when you promised. If you do get into a situation where you are struggling to make a payment tell them in advance, and then when you will make this payment up. People hate it when they have to chase you when a payment has been missed; this destroys trust.
If you have a friend or family member who trusts you, has a clean credit history, but does not have the money to lend you, then they might be able to help you by becoming your guarantor for a guarantor loan (see more detail below in Loan 5).
- Perhaps the most important question is should you borrow from family and friends. Click here to see.
Option 2: Bank Overdraft
The overdraft can be one of the cheapest ways of borrowing money and are great for short term emergencies.
The high street banks are though becoming less and less helpful when it comes to giving out overdrafts, especially if you have a bad credit rating.
But it is worth asking your bank, they can only say no!
- Overdrafts can be expensive though. Find out which ones cost the most right here.
Option 3: Credit Card
If you have an existing credit card with a spare balance this may be a way of getting access to short term money.
Whilst it is possible to get cash out of some credit cards, this is usually very expensive and incurs extra fees, so credit cards are best used for paying for expenses, such as a car repair, directly.
There are a limited number of credit cards available to people with bad credit histories; though if you need money quickly these credit card applications can sometimes take up to a month; and there is no guarantee they will accept your application.
Credit cards can be a good option if you have an available balance; but remember to make a plan for paying the credit card back, for large credit card balances can be very expensive per month.
- Top Tip – Follow these 3 tips to find the best credit card for you.
Option 4: Payday loans
The payday loans are now widely known, partly because of high levels of TV advertising, but also because of much bad press due to very high charges.
They can be a good solution to fast cash, but if you do not pay back on time, or use the loans regularly, they can become extremely expensive and cause people serious financial difficulties.
A payday loan should only be considered if (1) all other options have been deemed unsuitable, (2) that you are comfortable you can make the repayments and (3) you are comfortable it will be a one-off loan.
- Click here to see – what is a payday loan – and why are they so controversial?
- Also see our post The 5 Dangers of Payday Loans
Loan 5: Guarantor Loans
A type of loan that required you to find a friend or family member with a good credit rating to back up your loan application.
It, therefore, does not matter how bad your credit history is, so long as your guarantor has a clean credit history.
They are up to 10 times cheaper than payday loans.
If you think you can find a friend or family member who will trust you to make the repayment; then a guarantor loan might be the right option for you.
Look at our loan calculator below and submit your details to receive a range of loan offers.
Have you ever been asked to be a guarantor? Find out what it may entail by clicking here.
Bad Credit Loans Made Easy
If you think you can find a friend or family member who will trust you to make the repayments; then a guarantor loan might be the right option for you, they may even be available for within the same day.
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