Finding loans with a bad credit rating is never an easy task, as many lenders do not want to take the risk of lending money to someone whose credit rating is less than perfect. There are also many different types of loans out there so choosing the most suitable loan can be confusing. With this in mind, we have come up with a guide to choosing bad credit loans no credit check to make your life so much easier.
We are going to look at:
- Whether a credit check is needed;
- The types of loans most suitable for bad credit;
- The eligibility criteria for loans;
- How to apply online for a loan.
Bad Credit Loans No Credit Check – Is There A Check?
This is going to be the first question on the lips of anyone with bad credit who wants to borrow money.
It would be nice if there were no such thing as a credit check but sadly everyone in the UK who wants to borrow will have to go through one to some extent.
However, with certain loan types, the credit check is not thorough; this is good news for anyone with bad credit.
Usually, this applies to payday or short term loans where the amount of money borrowed is small in the grand scheme of things. In cases such as these, a soft credit check is usually sufficient.
Your Circumstances Are Also Considered
Just because you have to undergo a credit check it does not mean that you will automatically be turned down for a loan. Your circumstances might have changed from when you earned your poor credit rating and the panel of lenders that we work alongside also consider this. They will look at the amount of money you have coming in and going out to determine if the loan is going to be affordable.
Types of Loans for People with Bad Credit
There is no specific loan for people with bad credit but some loans may be a lot easier to find approval for than others might be.
Two types of loans are the short term and payday loans. There is also a personal loan but approval for this is generally stricter, so it is going to depend on how poor your credit rating is and whether the lender thinks a larger loan is going to be affordable. Another type of loan is a guarantor loan.
Let’s Look at the Payday Loan
Out of all the loan types, the payday loan is perhaps the easiest type of loan to be approved for if you have a poor credit rating.
Lenders may allow you to borrow between £100 and £500 with the payday loan with the loan either being paid in full on your next payday or spread out for up to three paydays.
Lenders Will Check the Loan is Affordable
With this type of loan, the amount you are borrowing is on the small side so lenders are not too worried about your past, however, they will still want to make a soft credit check.
This means they will not look too deeply into your credit past. At the same time, they will also undertake an affordability check by comparing what you have coming in each month and what you pay out.
Loans of this nature are generally classed as emergency loans or same day loans because many people apply for them if they are faced with an unexpected financial outlay.
The loans are fast to apply for online and you know within minutes if you are approved.
Interest on payday loans is usually charged on a daily basis so if you can repay the loan in total with interest on one payday (assuming your paydays are monthly), it will cost you less than if you spread it over three paydays or three months.
What Is A Short Term Loan?
A short-term loan is another option for borrowing over a short period but that period can be extended for up to 12 months. This would be dependent on the lender, with some perhaps offering loans for 18 months or longer.
Lenders generally offer sums of money in the region of £500 and £1,000 but this also depends on the lender and your credit rating.
The short-term loan can be a good type of loan for anyone who needs to borrow more than what the payday loan offers but who doesn’t want to commit to borrowing spread out over many years.
The APR Will Determine How Much Interest
With this type of loan, you have to consider the APR, the annual percentage rate. This determines the interest on the loan over the year and generally, the least percentage of APR added the less the loan is going to cost over the term of the loan.
Always check the small print or terms and conditions of any loan you are considering as this is where fees are hidden that will affect the loan.
For instance, the provider might stipulate that if you repay the loan early you have to pay an early repayment fee. This might outweigh any savings you might make if you could pay the loan off early.
Can I Get a Personal Loan with Bad Credit
With personal loans, you can generally borrow up to £15,000. This is substantially more money than what the payday or short term loan offers so the lender is going to want to go over your credit history carefully.
Lenders might be willing to take a risk on you if your credit file is not too bad; however, you can expect to pay a penalty with a higher APR for bad credit loans no credit check. This is because the lender sees you as being a bigger risk.
Again, the APR will affect how much interest is added onto the loan. The good news is that while you will not get the cheapest rates if you have a bad credit rating, we work with lenders who offer the most competitive rates.
Also, check for early repayment fee clauses in the terms and conditions of the loan before signing up.
Should I Consider Guarantor Loans?
Guarantor loans are another option for people with bad credit but they do come with some downsides.
They are generally easier to be approved for than a personal loan but they do require that you find someone to stand as your guarantor. This means they guarantee you can repay the loan or they take over the repayments.
Guarantor loans have been known to cause the breakdown of friendships and should be given careful consideration. They also usually come with high rates of interest compared to other loans.
Are You Eligible For A Loan?
When applying for a loan, whether a payday, short term, guarantor or personal loan, you have to be eligible. You need to:
- Be 18 years old at least
- Live in the UK
- Have a regular income (This can be from work or some types of regular benefit)
- Have a UK bank account
- Have a debit card
- The ability for a direct debit to be created.
Applying Online for Your Loan
You can apply for any of the above loans online and this is the fastest way to do so as there is no waiting for paperwork.
With just a few details, including how much you would like to borrow and when you want to pay it back, we can search for a loan on your behalf.
Search with Multiple Lenders from One Application
We work alongside a large panel of lenders from the UK and from your single application; we can try to match you with one from that panel. If one lender should turn you down, we can move onto the next and so on, until hopefully, we find a match.
Once we have found a loan for you to can check the details of it and make sure it is suitable then go ahead and sign for it. In some cases, the money from the loan could be paid the same day into your bank account.
Allow us Bonsai Finance to bridge the gap between lenders and you. The panel of lenders we work with offer competitive rates of interest on bad credit loans no credit check. They also offer numerous loan options and affordable loans. While they will undertake a credit check, it does not mean you cannot get a loan. The lenders will consider your circumstances at the moment too, as of course, you may now be in a better position than at the time you acquired your bad credit rating. Apply with our help today; you could have the money paid straight into your account the very same day, often within hours.