4 Ways to find Personal Finance with a bad Credit Rating

You need to be wary of the sub credit finance and personal loans market – high fees and interest rates can mean that a poor decision can turn out to be very costly.

To help you make the right decision we summarise here the four main types of personal loans.

A-Picture-of-a-Credit-CardLoan 1 – Specialist Credit Cards

  • Works like any other credit card
  • Limits can be fairly low – typically around £1,500
  • Conditions regarding applications, e.g.. missed payments and CCJ’s may need to be a year or more old
  • Can take a couple of weeks to be approved for the card (or not!)
  • APR’s typically 35 – 40%

These types of cards can be an excellent option if you do not need to borrow very much and if your missed payments were over a year ago.  While they are more expensive than standard credit cards, the specialist credit card is the most cost-effective option here.

Guaranteed hand written wordsLoan 2 – Using A Guarantor

  • Typically from £50 to £10,000
  • Requires a friend or family member to guarantee your loan repayments
  • Interest rates typically around 700% APR for amounts ranging from £50 to £500, and 50% APR for amounts ranging from £500 to £10,000

If you cannot get the type of card detailed above,then a guarantor loan may offer the perfect alternative, although you will require a friend or family member to back you application.

doorstep loans imageLoan 3 – Doorstep Finance

  • Unsecured short term financial options where the lender calls at your home to collect the repayments
  • Fast cash available – typically up to £100 to £500
  • Repayment periods of up to a year
  • Can have high interest rates between typically about 275% and 550% APR

Doorstep finance is another option for amounts ranging from £100 to £500. Some people are put off by the lenders agent coming to their home, but a doorstep is a cheaper option than payday borrowing, especially if the loan is required for up to a year.

payday marked on calendar pictureLoan 4 – Payday Finance

  • Unsecured short term personal borrowing options available online and high street specialists
  • Fast cash available – typically up to £50 to £500 in 24 hours
  • Short term options, designed to be taken out for only a few weeks – typically up to 4 weeks max
  • Can have very high interest rates upto 5000% APR

Payday finance has become widely used as they have been heavily advertised; whilst they offer a fast short term option, they are very expensive, and should be taken out with great care.

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