Are you spending sleepless nights wondering where to get money because you have a low credit score or rating? Have you been rejected by mainstream banks and feel like you’ve reached the end of the road? If you find yourself in this predicament, it’s about time you tried applying for a bad credit loan. Also known as adverse credit loans, bad credit loans are specifically designed for people who are over 18 years of age, in employment and have a very poor credit history.
This kind of loan facility is instrumental for those whose poor credit history is the bane of all their rejections whenever they seek for a loan. The advantage of this kind of loan is that it gives people with a poor rating an opportunity to get the much needed cash irrespective of the fact that they have a very low credit score. The second advantage is that it serves to repair their tattered image if only they make repayments on time.
On the flipside, like logbook loans, bad credit loans attract a very high APR as those seeking for them are deemed to pose a high risk to the lender. People who are unable to secure loans from mainstream financial institutions or building societies can always approach licensed lenders (also referred to as subprime lenders) for a bad credit loan.
Types of bad credit loans
Basically, there are two types of bad credit loans:
- Secured loans
- Unsecured loans
Unsecured loans tend to be for smaller amounts not exceeding £35,000 but always attract high interest rates. The advantage of this kind of loan is that your property will not be at risk should you default on making payments. Subsequently, secure loans attract relatively low interest rates but the greatest disadvantage is that in the event you default on payments and unable to make payments, your property will be at risk.
Irrespective of which type of bad credit loans you go for, it’s important to ensure that you make your repayments as early as possible to reduce the interest you will pay in the long run and also improve your credit rating in the future.