Having a bad credit rating is not fun when it comes to the time you need to apply for a loan. All financial institutions will offer loans. You might have been with your bank for more than twenty years or so, but if during this time you have obtained a bad credit rating, the chances are they will turn you down if you apply with them for a loan. Thankfully, your bank is not the only option for borrowing. To better your chances of approval you can apply for bad credit loans through our panel of UK lenders all of whom consider your current circumstances, along with your credit rating.
Here we are going to look at and explain the following:
- The many benefits to applying for a loan online if you have a bad credit rating;
- The best loans to apply for if you have bad credit;
- The differences between the short-term loan, payday loan and guarantor loan;
- How to apply in easy steps for your loan.
3 Benefits of Applying Online For a Loan with a Bad Credit Rating
First, let us look at the three benefits to applying for a loan online, whether you have a bad credit rating or not and there are many more of them.
Fast and Easy Application with an Instant Decision
One of the biggest benefits to applying for a loan online with our help is that the application is fast and easy and you get an instant decision.
You can make an application in just a few minutes and within minutes of doing so, you will know if we can match you up with one of the lenders we work with. This means if you want the money paid into the bank on the same day or next due to an emergency, you will not be left waiting and wondering if your application is a success.
We Work With Multiple Lenders
As we work with multiple lenders, we have the capability to help you find a loan from one of them. If one lender turns you down, we can move onto the next. Your chances of finding approval with just one application are greater than if you have to search for yourself and make several applications. It also means that multiple searches are not recorded on your credit rating as they would if you chose to search and make numerous applications on your own.
All you need to do is fill in your information in one application to search with a panel of UK lenders.
Lenders Take Your Ability to Repay Into Account
The lenders we work with in the UK all take your ability to repay the loan into account, not just your credit rating.
Lenders will have to look into your credit rating, as they all do in the UK, however just because you have a poor credit rating does not mean that they will not offer you a loan. Some lenders will make what is called a soft credit check and this means they do not look too deeply into your credit file. What matters more to the lenders we work with is that the loan you are applying for is affordable to you.
Best Bad Credit Loans
If you have a poor credit rating, you are more likely to get approval for some loans more than others. Usually, the less you want to borrow and the quicker you can repay it, the more prone you are to get approval for the loan. Therefore, with this in mind, we are going to take a look at the best loans to apply for to get approval even with a poor credit rating. These include the:
- Short-term loan;
- Payday loan;
- Guarantor loan.
The short-term loan is often called a same day loan or quick loan and as the name might suggest it allows people to apply for a loan and pay back over the short-term. But what is the short-term? Is it a month, two months, three or more?
While different lenders might have different feelings about what a short-term loan is, in general, it is a loan that is repaid in less than one year. This means you could spread the cost of the repayments out for up to 12 months. As mentioned before this would depend on the lender and the amount you wanted to borrow.
A short-term loan falls in-between a guarantor loan and payday loan. It is a loan that is taken out for just about any reason and generally, lenders do not ask what you want the money for.
With the short-term loan, you can expect to borrow between £500 and up to £1,000. Again, this would depend on the lender, with some perhaps offering more and some less. Any less and the loan usually falls into the payday loan category and anymore and the lender may call it a personal loan or ask that you take out a guarantor loan if your credit rating is particularly bad.
The short-term loan will incur interest over the term of the loan so you do need to know the APR of the loan. The APR determines how much interest is added onto the loan. Usually the higher the percentage rate the more interest you will pay so look for a loan with the lowest APR.
Payday loans are extremely popular among people with bad credit ratings as not only is this one of the easiest types of loan to be approved for but it can also help you to strengthen your credit rating and restore it when you borrow sensibly. Lenders are not too interested in your credit rating when applying for payday loans for small sums of money.
In March 2018, it was reported that around 1.4 million households relied on payday loans. In the past payday loans have earned something of a bad reputation but problems mainly stem from people who have taken out payday loans and not been able to repay them and found interest and fees adding up over the long term. Payday loans can work in the way they are intended to work providing you can repay the loan on time and in full.
The payday loan is often considered an emergency loan to give you a helping hand in times when a financial emergency has cropped up.
You can apply for a payday loan for any reason but they are usually loans that are applied for in cases when a financial emergency has cropped up and payday is some time away.
These can include:
- To pay unexpected utility bills that are the final demand and you forgot about them;
- To pay for an MOT you forgot to budget for;
- To pay for car repairs or recovery if your vehicle breaks down;
- Replacing a tyre that has a puncture;
- Paying for repairs or replacement or household items that have broken down;
- To pay any other unexpected bill or payout that crop up and payday is still some time away.
A payday loan generally offers between £100 and £500, with the loan being repaid over one to three months. When payday loans first arrived in the UK, they were repaid on your next payday in full, hence the name, however now lenders will allow you to spread the cost over three paydays. Payday loans have daily interest added on so the quicker you repay the loan the less interest you will pay.
Payday loans should not be relied upon from month to month so always ensure you can afford the repayment or repayments out of your paydays.
If you have a very bad credit rating and you want to borrow a larger sum of money, generally up to £5,000 and spread the cost of the loan out for up to 36 months or so, you might want to consider applying for a guarantor loan.
This type of loan is not suitable for everyone, as you do have to know someone close to you who would be prepared to stand as your guarantor. This essentially means they are agreeing to take over the loan repayments if you find you cannot manage them. The downside is that it can cause problems with relationships and friendship and of course, you have to be able to talk about your finances and admit you have a poor credit rating.
Applying For a Loan for Bad Credit
Applying for a loan if you have bad credit is easy and fast if you apply for your loan through us. Just follow these steps and search for your loan with a panel of UK lenders.
- Choose how much you need to borrow and how long you want to spread the loan over;
- Fill in your personal information including your name, date of birth, address, bank account number and debit card number, how much you have coming in each month and how much your outlays are;
- We can then try to match you up with a lender from our panel of lenders;
- When we find you a loan you can check out the details, including the APR and how much the loan is going to be in total;
- Sign up for the loan and have the money paid into the bank on the same or next day;
- Take note of the repayment dates and pay the loan back on time.
Things to Consider When Applying For Loans
There are some things you should take into account when considering any loan.
The first thing you need to do is work out if the loan is going to be affordable. By borrowing and repaying a loan, you can get out of financial difficulty in the short-term but the loan will only work if you know it is affordable and you can repay the loan back on the specified date or dates. By doing so you can contribute to improving your credit rating, but if you default on the loan, it will have adverse effects and go against borrowing again in the future.
When working out if the loan is affordable you also have to take into account any fees and interest added onto the loan. Bear in mind the quicker you can repay a loan the less interest it will incur. Also, consider the fact that some loans may have an early repayment fee attached to them. This means if you find you can repay the loan quicker than you had anticipated and want to pay it off, you might pay an early repayment fee.
Some criteria will have to be met before lenders will consider you for a loan and these include:
- You are at least 18 years old;
- You have a UK address;
- You have a regular income coming in each from work or benefits;
- You have a UK bank account;
- You have a debit card attached to the bank account;
- A direct debit can be created on the bank account.
It is possible to obtain bad credit loans in the UK by way of a short-term loan, payday loan or guarantor loan. By applying for your loan with our help, you boost your chances of getting approval as we work alongside a panel of lenders and all you need to do is make one single loan application. The lenders we work with will look into your credit file but at the same time, they will also bear in mind that your circumstances might have changed. Providing the lender believes you can repay the loan, and you can show them you have a regular income, there is no reason why they will not consider your circumstances.