3 things to avoid with loans for bad credit
Search Google for ‘loans for bad credit‘; every single day thousands of men and women in the UK type in that exact same term.
So what should you look out for 👀?
Why are people searching for Bad Credit Loans?
Maybe its to buy a shiny new car or to have the house redecorated, or maybe its to consolidate crushing debts, bring the monthly payments down and try and get a normal life back?
Unfortunately, from our experience the need for longer-term loans are not normally for the nice things in life, but to make the best of a bad situation:
- Emergency house or car repairs
- Debt consolidation to bring down the cost crushing smaller loans
- Loans to help fund a business (we all know banks are not lending anymore!)
We are acutely aware that with a poor credit rating; your options to get finance are limited and the high street banks are just not interested.
Though having said that since the credit crunch in 2007, there has been an explosion of ‘bad credit’ lenders – some good, some bad, some downright terrible!
- Please Note – Wherever the term ‘bad credit’ is included, it is always sensible to do your homework. Click here to see why.
So if you are thinking about a longer-term loan and have a bad credit history, then we would suggest considering the following points borrowing any money:
1. Avoid borrowing more money than you absolutely have too
This might sound really obvious, but the more you borrow, the more you are going to have to pay back!
Its a fact that bad credit loans are more expensive, so, therefore, you have to be really careful that you do not overstretch yourself and can comfortably afford the monthly repayments.
A longer-term loan with comfortable monthly payments should be a route to solving problems; not a way of getting you further into debt storing up bigger issues for the future.
We would recommend thinking about the absolute minimum you could get away with borrowing and only apply for that amount.
- Did you know that there is such a thing as good debt? Find out the difference between good debt and bad debt.
2. Avoid monthly payments you cannot comfortably afford
One of the main mistakes people make is overestimating the amount they can afford per month and underestimating unexpected expenses and ‘things that come up’!
The result is often a new monthly loan repayment that means once again the money is running out before the end of the month!!
Your goal should eventually be to have spare money at the end of the month; so in the future when those large unexpected expenses to turn up, you have the savings to pay for it; so a long term bad credit loan with monthly payments you can comfortably afford is the first step towards this.
Not being able to afford your monthly repayments can be a cause of massive stress and a huge burden; so please make sure before considering taking out a loan that you can comfortably afford the repayments.
- Have you ever wondered what happens if you cannot repay a loan? Click here to find out.
3. Avoid borrowing from a terrible bad credit lender!
Unfortunately, there are a number of lenders and brokers out there who are not interested in what is best for the borrowers long as they can lend and get a maximum return then that all they are interested in.
Since the explosion of bad credit lenders, many people have been subjected to huge fees, charges, interest rates and aggressive tactics.
To avoid this we highly recommend taking a bit of time and shopping around for the best loan.
- To see why choosing the right lender is so important, check out – “My first payday loan was £100 for a night out. 5 years later I was in £26k of debt”
We saving you the time and effort with one simple application to multiple lenders
- Get Loan Quotes
- We highly vet all our lenders and have many specialist bad credit loan providers who we pass your loan application onto.
- From our single application, you will then have a choice of loan offers which you can compare and then make an informed decision as to the best option for you.
- If you would like a little further information before making a decision, check out our FAQ section for a closer look at some of the areas that require further explanation.