Need a Loan with Poor Credit – The 4 Best Ways

There have never been more options than right now.

However, with so many different forms of finance now on the market, choosing the right one to keep your costs down has taken on greater importance than ever before.

With this in mind, we have drawn up the following article to highlight 4 of the best options currently available.

What are Bad Credit Loans?

This type of borrowing has been created to provide people to who have had past financial struggles with the opportunity to borrow money where they would otherwise have struggled.

However, to counter the higher risk the lenders are exposed to, specialist borrowers will unfortunately be expected to pay the price for their previous financial mishaps – typically in the form of a higher interest rate.

Make Sure you do your Homework

the dog ate my homeworkBecause you will be faced with a number of options which are only available at less competitive rates, it is absolutely essential that you take the time to compare some of the options which are available to make sure you get the best possible deal.

To help you along the way, we have drawn up a quick guide to 4 of the highest profile and most accessible options:

Option 1: The Bank of Friends & Family

Turning to our family and friends to help us through difficult financial times can offer one of the best options. Peer to peer lending is increasing in popularity and below we listed some of the positives and negatives.

Positives

  • Flexible Terms: Because of the informal nature of borrowing money from family and friends, the terms are completely flexible. Interest and repayments are 100% negotiable between both parties.
  • Minimal Charges: As implied above, whereas the interest rate charged by traditional lenders can be very high, this is unlikely to be the case when borrowing from friends and family.
  • Quick & Simple to Establish: Some financial options can take an eternity to set up because of the checks and paperwork which are required. This will not be the case here.

Negatives

  • Potential Future Issues: The most common reason for people choosing against this option is worry about potential friction should problems arise in the future. If you are unable to make the repayments, this can lead to a very tricky situation.
  • Will Not Directly Improve Credit Ratings: Successfully repaying a loan from a recognised lender will help you to take positive steps towards rebuilding your credit rating. However, a loan from a family or friend will obviously be unofficial and will not directly help in this regard.

Option 2: Guaranteed Financial Options

If you feel a little too embarrassed to ask someone close for a loan or they would like to help but cannot afford to lend you the money directly, a guaranteed loan may offer the ideal solution.

Positives

  • Quick Borrowing: This type of borrowing has been designed to provide a quick answer and in some cases the money can even be available within a few hours
  • No Financial Scoring: The financial records of the borrower are not checked, this is due to the presence of the third party who will guarantee the repayments
  • Typically Larger Lending Capacity: Many of the options are likely to only be available for relatively small amounts. However, this type of finance can often be available for sums of up to £10,000 in some cases.

Negatives

  • Requires a Third Party Involvement: This can be very off putting for some people
  • Expensive: Although cheaper than many current options, they are still likely to be significantly more expensive than standard options available from your bank.

Option 3: Credit Unions

Credit unions are non-profit organisations which pass along their earnings to members in the form of lower fees and higher level of customer service.

Positives

  • Variety of Sizes Available: The majority of Credit Unions are typically happy to offer much smaller amounts.
  • Reducing Interest: Interest is charged on the reducing balance of the amount borrowed.
  • Many Repayment Channels Available: You can pay back loans through a variety of channels, such as DD, Payroll deduction, collection points etc.
  • No Hidden Charges: The options available come with no hidden charges and no penalties for early repayment.

Negatives

  • Limited Branch Locations: Because Credit Unions only operate from one place, it can be an inconvenient way to borrow.
  • Fewer Services: Credit Unions are unlikely to offer as many services as other lenders.

For more information on Credit Unions, please check out dedicated Wikipedia Credit Unions page.


Option 4: Payday Borrowing

Payday borrowing is the marmite of the financial world (people either love them or hate them!).

When used as intended, they can offer a highly effective short term financial fix. However, due to the high interest rates and charges associated, payday lending is fraught with danger.

The negatives surrounding payday borrowing is well documented but the FCA (Financial Conduct Authority) is currently addressing many of the issues.

To see exactly what the FCA had to say, please visit the following article to see how the FCA sets out in detail how it will regulate consumer credit.

Commenting specifically on payday lenders, Martin Wheatley said:

“Today I’m putting payday lenders on notice: tougher regulation is coming and I expect them all to make changes so that consumers get a fair outcome. The clock is ticking.”

Martin Wheatley
Financial Conduct Authority

Testimonial Martin Wheatley

Positives

  • Quick Response: Typically available with 24 hours
  • Smaller Amounts: Generally only available for sums of up to £500, quick repayment will keep interest payments in check.

Negatives

  • Expensive: Can have very high interest rates up-to 5000% APR
  • Severe Penalties: Missing repayments can lead to severe penalties

Regardless of your preference, always make sure that you compare options from several different lenders to ensure that you find the best possible interest rate before signing the final paperwork.

Are you looking for the best option?

Filling in countless application forms can be time consuming .

We have streamlined our application process to allow you to submit a single application to the UK’s very best lenders.

All you have to do is use our calculator to see what you can afford to borrow and then complete and submit our simple application form.

Within minutes of hitting the submit button, you will start to get offers delivered directly to your e-mail address!


Helping you cut to the chase

  1. Past financial issues – no problem

  2. Affordable rates and fees

  3. Fast application and payout


Plus
  1.   One application to multiple lenders
  2.   No broker or application fees
  3.   No early redemption fees
  4.   Secure online application

how much


How it works?


Quick application for £50 to £12,000
no risk free
  • No credit checking*
  • No obligation process
  • No application fees
  • Secure online application


4 Easy Steps


1. Calculator

Calculate how much you can afford to borrow and for how long

2. Easy Online Form

One quick online form to our panel of multiple lenders

3. Multiple Offers

Receive a choice of no obligation offers from multiple lenders

4. Get Your Money

Send off your preferred offer and get your cash




Save time with one easy online form

Why spend time filling out lots of different forms to numerous lenders?

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* Based on repaying after 30 days

Borrowing over your repayments will be approx. per month and in total. For actual figures hit Get My Loan to get a choice of free, no obligation loan offers from the best bad credit loans lenders in the UK.