People with bad credit ratings do have options for borrowing. There are no specific loans on the market with the name of loans for bad credit UK, but there are certain types of loans that may be approved more easily than others may.
For millions of people in the UK money and credit is a huge source of worry. People have little, if any savings, which mean that if suddenly met with a financial emergency or outlay, they have nothing to fall back onto.
Around 7.5 million people in work do not have the option of saving money each month from their wages. Worse still, two in five people admitted that they worry about finances. So, if you fall into this category you are not alone.
While those more financially secure would not think twice if their fridge broke down, for millions of others it becomes a huge issue with people with no savings having to turn to lenders for a loan.
More Than 50% of the UK Run Out of Money before Payday
Recent media reports have suggested that more than half of the people in Britain run out of money before their next payday come around.
Not only people living in low-income areas have credit scores that are poor, but middle-income areas are also affected. Regions most struggling to find affordable loans include:
- Northern Ireland.
Most Popular Loans for Bad Credit UK
One of the most popular types of loans in the UK that people with poor credit ratings apply for is the payday loan. Following this, short-term loans are popular.
It is a sad fact but people in the North of England and South Wales are the hardest hit. People who have very poor credit ratings find it extremely difficult to gain access to loans with high street lenders turning them away. This has left them prey to unethical lenders offering high-cost loans.
We Aim to Bridge the Gap between Lenders and Borrowers
We are not lenders ourselves. Instead, we work alongside a panel of ethical lenders in the UK. This means that we can bridge the gap between borrowers looking for loans with a poor credit rating and lenders more willing to offer loans.
The good side is that by applying for a loan online means it can be undertaken anywhere in the UK, even in the most remote parts. Providing you have access to the internet and meet the criteria for applying for a loan, you can apply online and get an instant decision.
Lenders We Work Alongside Offer Competitive Rates
The lenders we work alongside offer some of the most competitive rates of interest on loans. While you are not going to be offered the lowest rates of interest if you have a poor credit rating, you are going to get access to some of the best deals. The interest rate is going to be better than what a loan shark would offer and the panel of lenders we work alongside offer numerous loan options.
As we mentioned before payday and short-term loans are two options of loans for bad credit UK that people with poor credit ratings may find it easier to get approval.
What Is a Payday Loan?
A payday loan can be a good option for anyone who finds himself or herself in a sticky financial situation and who needs a small amount of money. This type of loan can work as intended providing you know that without a doubt you can repay the loan.
Lenders will allow you to take out a payday loan and repay the loan in full with any interest added, or spread the cost of borrowing over up to three paydays.
When considering payday loans you do have to take under consideration that interest is added on daily. Therefore, the longer you take the loan over the more it will cost as the more interest is added on.
It is also important to work out that you can afford to make the repayment out of your payday or paydays and not leave yourself short of money.
How Much Does A Payday Loan Offer?
The amount you might be offered with a payday loan is going to vary between lenders, your ability to repay, income and outgoings.
Lenders will generally offer sums of money starting from around £100 and allow you to borrow up to £500.
You can apply for a payday loan to cover just about any financial outlay but bear in mind that this type of loan should not be considered to rely on from month-to-month. This means a payday loan should not be relied on if you regularly run out of money before payday. Borrowing this way, generally leads to debt spiralling out of control.
Payday loans should be classed as emergency loans, to pay for something unexpected that has cropped up. For instance:
- A large unexpected bill that cannot wait until payday;
- Repairs to a household appliance
- Repairs to your vehicle;
- Putting your car through its MOT and you forgot to budget for it;
- Getting yourself out of an unauthorised overdraft after overspending;
- Paying for emergency repairs to the home, such as a plumber.
Interest on Payday Loans
You will have heard a lot of negativity regarding payday loans in the past. This has mainly been thanks to misunderstandings about the loans.
The APR on payday loans is one thing that attracted a great deal of negativity as it is often shown in many thousands of percent. When compared to the double figures of a personal loan, this can be shocking.
There is a big difference between a personal loan and payday loan though. The personal loan is usually taken out over several years, while the payday loan is only taken out for one to three months.
As you are repaying the loan back quickly, you are not accumulating interest over the year. You will pay interest only on the number of days you take to pay the loan back. Therefore you are not going to pay the thousands of percent shown.
What Is A Short-term Loan?
Another loan popular with people with poor credit ratings is the short-term loan. Again, this loan is easier to be approved for than loans offering thousands of pounds taken out over several years.
Lenders may offer short-term loans in the region of £500 to £1,000. Lenders usually allow repayment schedules for up to 12 months.
It is important to make sure that the monthly repayments are affordable and usually the longer you spread the loan over, the less the monthly repayments will be. Of course, this also has to be weighed up against the fact that the longer the term of the loan the more interest is added on, and so the more the loan costs you in total.
The amount you might be able to borrow is going to depend on your ability to repay the loan and the lender will check. It will also depend on your credit file, as lenders will look into your credit rating, if only briefly. However, your credit rating is not the only thing that they will base their decision on, as they know that your circumstances might change.
Can I Get a Personal Loan with Bad Credit
If you have a bad credit rating but need to borrow a larger sum of money, say up to £5,000, you might need to try to obtain a personal loan.
Personal loans are more difficult to find approval for than short-term and payday loans as they offer a larger sum of money and repayments can be spread out for longer. Usually, with payday loans, the loan might be spread out for up to 36 months.
Lenders will take a deeper look into your credit file when applying for a personal loan. No lender is going to offer you thousands of pounds without making an assessment as to how likely you are to repay the loan.
While there is no guarantee you will be approved for a personal loan, we do work with lenders who will also consider verifiable income and loan affordability.
How Lenders Determine If You Can Borrow
While lenders on the high street focus on your credit rating before deciding whether to approve or deny you a loan, the lenders we work alongside will also consider affordability and verifiable income.
All ethical lenders will want to ensure that the loan is going to be affordable before offering it to you. Lenders we work alongside will check your income and outgoings before making a decision, along with peeking at your credit file. There is a good chance your application might be approved if the lender thinks you have enough disposable income and your circumstances have improved from when you obtained your bad credit rating.
Loan Application Eligibility
Some eligibility criteria need to be met before you can apply for a loan. This includes:
- You need to be over 18 years old;
- You have to prove you live in the United Kingdom;
- You need to hold a bank account in your name;
- A debit card should be attached to the bank account;
- You need a bank account that can take direct debits.
You will also have to tell the lender how much income you get each month and what you payout. This determines how much disposable income you have left.
Disposable income is income that is not used for paying bills or living expenses and it is money that you could use to pay the loan back.
There are many benefits to applying for a loan online and even more benefits to taking our help. These include:
- Lenders we work alongside consider all circumstances, even poor credit ratings;
- Lenders base loans on verifiable income;
- You get access to a wide range of loan options;
- Lenders offer some of the more affordable rates of interest;
- Lenders offer affordable loans;
- It takes just minutes to apply for a loan online;
- You get an instant decision;
- From one application you can access a panel of ethical lenders;
- Numerous applications are not noted on your credit file;
- The entire loan application can be undertaken online;
- You can check out the details of the loan before signing up;
- If approved money could be paid directly into your bank account within hours.
Applying for an online loan can be undertaken in just minutes. Tell us how much you want to borrow and when you can repay the loan and we can search with the panel of lenders we work alongside. You are given an instant decision so you are not left hanging around waiting for an answer and if approved the loans funds are paid directly into your bank account. This is a lifesaver if you need to get hold of money quickly to meet an emergency.
Check Out the Loan Details Online
If we find you a match, you can check out the loan details. It is important that you check the full details of any loan you are considering so that you know how much interest you will pay, how much the loan is going to cost in total and whether there are any hidden fees.
Some lenders will add in an early repayment fee for example. This is a fee more typically associated with personal loans when taking a loan over many years. However, it may apply to other loans so it’s worth checking.
You might be able to save interest on the loan by paying it off early if you find you have a windfall; however, with an early repayment fee in place, you might lose any benefits.
Apply for loans for bad credit UK today with our help, get access to a range of lenders offering affordable loan options and competitive rates.
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