The UK is one country where loans for bad credit no guarantor needed are highly sought after, but some people are left turning to loan sharks. In this article, we are going to look at some of the most targeted regions around the UK where people are finding it difficult to obtain acceptance for affordable borrowing. We will then look into a way of borrowing that does not involve the loan sharks that seem to be prevalent in these regions.
Loan Sharks Target Vulnerable Families in the UK
Reports in UK newspapers have stated that high-cost loan sharks have been targeting people with low incomes who are vulnerable and looking for a helping hand by way of a loan.
It was reported that loan sharks are most prevalent in the North of England. In total thirty areas in the North are said to be where households were struggling the most to find affordable loans and were targeted by lenders offering high-cost loans.
These are all regions were people have low credit scores along with a high need to find a loan and surrounded by high-cost loans.
Just some of the regions with high borrowing needs targeted by loan sharks include:
- South Tyneside;
- Kingston upon Hull.
It appears that instead of being a matter of personal finance why people cannot get affordable loans, where you live is also a factor.
The Good Credit Index
The media reports came about after “Demos” talked about “The Good Credit Index”, which mapped out the credit environment in the UK.
The base of the report was credit scores, data from county courts, local high street provisions and web searches. The aim was to give an idea of how the region in which people live affect their ability to get access to affordable credit.
The report highlighted what they termed “credit havens” and “credit deserts”. Havens are regions where there is not much need for a loan but there are many affordable options available. Deserts are regions of the UK with limited access to affordable credit options and high need for loans, which left people turning to loan sharks for high-cost loans.
Generally, loan sharks work from home, targeting people with low or bad credit ratings who believe they cannot get a loan anywhere else. Often, they are people who have been turned down for a loan from the high street lenders and they do not know where else to turn. The cost of borrowing this way is extremely high, perhaps with the person repaying more than twice the amount they originally borrowed thanks to extremely high rates of interest.
The report stated that while many of the people living in these regions of the UK did have access to banks and building societies, many found they were turned down due to them having low credit scores.
How to Get Affordable Loans for Bad Credit No Guarantor
Thankfully, there is a way to avoid loan sharks even with poor to bad credit ratings and this is by choosing to look for a loan online with our help. We are not a lender. Instead, we work alongside a panel of UK lenders who are willing to consider all circumstances.
It does not matter whether you live in one of the regions outlined in the report, or not. It also does not matter if you do not have the best of credit ratings. We work with a large panel of lenders who offer affordable loans with some of the best rates of interest available based on circumstances.
Options for Loans for Bad Credit
There are two particular types of loans that people with bad credit might want to consider, both of which are more affordable than taking a high-cost loan with a loan shark.
Low Amounts Paid Back Quickly
The lenders that we work alongside are more lenient in regards to credit ratings than banks and building societies.
However, there are some things to bear in mind when considering applying online for loans for bad credit no guarantor. Lenders are more likely to offer approval for a loan to someone with a poor credit rating if that person is only asking for a small sum of money and they can repay it back quickly.
Borrow Between £100 and £500
A payday loan is one such type of loan. With a payday loan, you might be able to borrow in the region of £100 to £500. Many people apply for loans of this nature if suddenly faced with a financial outlay that is unexpected.
This might be due to:
- A large final reminder bill;
- An emergency repair to a household appliance;
- Car repairs;
- The cars MOT you had forgotten about;
- Repairs to the home.
A payday loan is paid back either in one lump sum on your next payday or it can be spread out over three paydays assuming you are paid monthly.
It is important to make a note of the days that you are paid as this is going to be when the lender takes the repayment. The interest is charged daily, so the earlier you repay the cheaper the loan. This is something that should be considered when you apply for the loan. However, at the same time, you also need to make sure the loan repayment is going to be affordable and not leave you broke until your next payday.
Don’t Let the High APR Fool You
There was bad press about payday loans in the past due to the high rates of interest associated with them. This was often in thousands of percent. However, you do have to bear in mind that with a payday loan you are not paying the annual percentage rate as you are only borrowing in the short term, one to three months.
Payday borrowing only gets expensive if you find you cannot repay the loan on time as fees are added onto the loan, along with more interest and the debt keeps spiralling. Thankfully, payday loans are now capped by the FCA, which means the lender cannot keep adding on fees and interest continually.
If repaid as agreed on time, they can be affordable solutions to getting hold of a small cash sum.
Borrow A Little More For 12 Months with a Short-term Loan
Another solution for short-term borrowing is a short-term loan. With this type of loan lenders generally, allow you to borrow up to £1,000 and spread the cost of borrowing for up to 12 months.
Loans of this nature may be a good way for people with poor credit ratings to get a helping hand when they need to borrow slightly more than what might be offered with a payday loan and spread the repayments for slightly longer.
Check the APR on Short-term Loans
When considering a short-term loan you do have to consider the APR. Generally, the lower the APR the less interest will be added onto the loan. However, if your credit rating is poor it makes sense that lenders will see you as being a bigger risk and so the higher the rate of interest. Of course, a loan of this nature is still going to work out a lot cheaper than taking money from a loan shark.
Another consideration for short-term loans is whether there is a clause in the terms and conditions that state you have to pay an early repayment fee in the event you find yourself able to repay the loan earlier than agreed. While you can save money by doing so, if you have to pay a fee it may outweigh any savings.
The Longer the Loan the More It Costs in Total
You also have to take into account that the longer you take the loan over the more the loan is going to cost you in total.
This is something you have to weigh up alongside ensuring the monthly repayments are affordable. Therefore, you need to find a fine line between not paying too much interest and keeping the loan repayments affordable.
Additional Loans That Don’t Need a Guarantor
Depending on how poor your credit rating is you might want to consider applying for a personal loan or a secured loan.
A personal loan and secured loan are different in that with the secured you have to put something of value up against the amount you wish to borrow. However, in the event you cannot continue meeting the loan repayments, you are at risk of losing whatever it was that you secured against the loan. This is usually your car or home.
With the personal loan, you do not need a guarantor and you do not have to put anything up against the money borrowed. However, the downside to this type of loan is that people with poor credit ratings find the loan more difficult to get approval.
If you are approved for a personal or secured loan, you may be able to borrow up to £5,000 with the lenders that we work alongside. The loan can be spread out for up to 36 months, giving you ample time to repay a larger loan. As with the short-term loan the longer you take the loan over, the more it is going to cost in the end.
In addition, you have to check the APR of the loan as this too is going to depend on how much interest you will pay on the loan. Your credit rating is going to affect the APR, the poorer your credit rating the higher the APR as the bigger risk you are seen to the lender.
Applying for Your Loan
We have made the whole process of applying for affordable loans easy. We work alongside a panel of UK lenders who will take all circumstances into consideration, even poor credit ratings.
Lenders will look into your current circumstances to find out of the loan is going to be affordable. To do this they will consider what you have coming in each month and what you payout. If you have ample money left over, you could make the loan repayments using this money.
All that is needed to start your loan application is a few details. These include:
- Your date of birth – you have to be at least 18 when applying for a loan in the UK;
- Your current address – you must have a UK address;
- Details of your income – either from work or regular benefits (not all benefits are classed as a regular income);
- Your bank account and debit card numbers – you must hold a bank account in the UK with a debit card attached.
We can then try to match you up with a lender from the panel we work alongside and if one lender cannot offer you a loan, we move onto the next. This means that you get to search for a loan with many UK lenders and all from making just one single loan application.
If we match you with a lender, you can go ahead and check out the details of the loan. You can also check the terms and conditions to make sure it is the right loan for your needs. If it is, you can sign up with the lender for the loan.
All of this takes just minutes and you get an instant decision. The entire loan application is made online, which means you do not have to hang around waiting for paperwork to come through for you to sign, which you have to then send back. In many cases when applying for a loan online, the funds from the loan are paid directly into your bank account on the same day, often within hours.
Therefore, anyone anywhere can avoid the loan sharks and find affordable loans for bad credit no guarantor needed online.
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