Bad Credit Loans UK Explained
People with a bad credit score tend to feel that simply because of their budgeting situation, they will never be able to get a loan from a bank.
In actual fact, there are many lenders in the marketplace that do give loans to prospects with bad credit.
Having bad credit is a big hindrance in your life.
While applying for a loan, it hinders your way in getting it approved.
Today lenders are certainly clear about their customers; they disapprove loans of people having a bad credit ranking.
Should you be rejected by the lenders simply because of credit, read the bad credit loans available on the market.
Nearly all of your preferences can be fulfilled with the help of poor credit loans.
Your wants may include:
- Wedding expenses
- Buying a new car
- Consolidating debts
- Studying abroad
- Hospital treatment
- Renovating home
Instead of wasting time and effort trying to persuade a bank to provide you with a loan with a poor credit history, investigate certain loan companies that really provide bad credit loans as one of their services.
These banks offer these financing options despite the dangerous that would discourage other banks from lending to you.
The drawback however, is that you face significantly higher interest rates than whoever has stellar credit borrowing from a traditional bank.
About Your Bad Credit Loan Interest Rate:
While those with poor credit usually face higher interest rates and associated fees on bad credit loans, there is still a ceiling on how much a lender of any kind can charge you by using a points system.
A point in the financial world is defined as a fee charged to the principal or initial loan amount, usually equal to 1% of the principal. Borrowers with good credit typically have their points waived, thus making their loans almost interest free or with low interest.
Those with sub-standard credit are usually charged four to five points on a loan. Consult your local consumer protection office to learn how many points you can be charged on a loan in your situation, as this varies from region to region.
Secured Loans May Be Best Option:
You do have the option of applying for a secured loan to hold your interest rates as low as possible.
Please remember this will require you to put up something of value as collateral, usually either the title to your vehicle or deed to your home if you are the owner. This is to guarantee the repayment of the loan and make the lender feel more relaxed about granting you the loan.
In this situation, the lender is so confident that you will repay the loan, due to the value of the collateral that they are willing to lower the interest rate for you. However, you need to know to borrow only what you know you can realistically repay and make your repayments on time.
Defaulting on any loan may damage your credit more and will surely be a hindrance in your financial life later down the road.
Raising Your credit rating with This Loan Type:
Despite having poor credit and facing a high interest rate, you do have a high probability of being qualified for a bad credit loan.
These loan companies have worked with similar customers and rarely turn down an application. Searching for these types of loans is as close as your computer as several of these types of lenders exist online to keep their expenses low.