Bad credit loans might be an option open to you even if you have a less than perfect credit record or have been turned down for loans previously.
A bad credit loan is one possible option to consider for those borrowers who are finding it tricky to source credit from other mainstream lenders.
It is more than likely that that the interest rate on a bad credit loan will be higher than the norm. This is simply a reflection of the fact that you lack other choices and may have a poor (or even non-existent) credit history.
Even if you have never had credit in the past, you may still find it difficult to meet the criteria for the main loan products on the market. After all, if a lender has no evidence to draw on to prove you are a reliable borrower, they are likely to be wary of offering credit to you. While some providers may view you as too much of a risk, other more specialist lenders will be happy to take you on.
It is an inescapable fact that if you are on the lookout for a bad credit loan, you are likely to have limited options because of your financial circumstances. However, many bad credit loans are a far better bet than some of the other options available to people who may be struggling financially. Because the rates on such loans are less competitive, it’s more important than ever to shop around for the best possible deal. And remember that if you are committed to repaying your new loan responsibly, this could be the perfect way to repair your damaged credit rating.
In an ideal world, you would avoid taking on further credit at all costs, but sometimes there is no other option. However, by taking out bad credit loans you may be able consolidate your debt, increase the repayment period or even get a lower interest rate.
A note of caution, though: do not use the fact that a bad credit loan may ease your financial burden temporarily as an excuse to take out further credit.
If you own your own property or have a comparable asset, then you may be able to take out a secured bad credit loan. Secured loans will generally be offered at a lower rate than a personal loan. They may be the only option open to you if you need to borrow a significant amount of money.
Think very carefully before using your home as collateral for any loan, because if you default it may be at risk. Be particularly cautious of converting unsecured debt into a secured loan, even if the repayment figures seem more affordable.
While you may be trying to avoid extra costs, it can be a very good idea to add an income protection policy to your BC loans to protect the repayments in the event that you are made redundant, fall ill or experience any other unexpected events that affect your ability to repay the loan.