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I need a loan but have bad credit

Posted on November 29, 2011 by Richard

“Banks only seem interested in potential customers with good credit ratings. What if I need a loan but have bad credit?”

This scenario is often true for people who need to apply for bad credit loans, in that high street lenders such as banks and building societies will require a credit check before deciding who to lend to, and more times than not will reject customers with bad credit history. Lenders like these require a larger extent of security against the loans. Bad credit customers should in fact probably not even bother apply for a bank loan with bad credit history.

Research your other options. There are many bad credit loans provided by specialist companies. There are two main types: Secured and Unsecured loans.

Secured bad credit loans are ‘secured’ against any of the borrower’s valuable possessions such as a house or car. This provides the lender with more security if the borrower defaults on repayments. You would probably need to be a homeowner to qualify for secured bad credit loans, and should you run into problems with making repayments you could be putting your possessions at risk. However the interest rate will consequently be lower than it would on an unsecured loan.

Unsecured bad credit loans are easier to qualify for. The lender will not require the money to be secured against your possessions. The advantages are you need not be a homeowner to qualify and therefore you can’t put your possessions at risk through missed payments. The main disadvantage is that because the lender’s risk is far higher, they would incur a very high interest rate on the loan compared to what you’d have on a secured loan. Unsecured bad credit loans will not usually exceed £25000.

For smaller, short-term loans research payday loans for bad credit, where you agree to pay back a smaller amount in full on your next payday.

This entry was posted in Blog and tagged apply for a bank loan with bad credit history, apply for bad credit loans, bad credit history lenders, i need a loan but have bad credit, payday loans for bad credit, secured bad credit loans, unsecured bad credit loans by Richard. Bookmark the permalink.


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