If you have very bad credit, you might be under the impression that it is impossible to find a lender willing to offer you a loan. Very bad credit loans are designed for people with bad credit and the chances of approval are higher as they offer smaller sums of money. While you might not be offered the lowest rates of interest or the best deals, finding a loan with a poor credit rating is not as impossible as you might think.
What to Expect From Loans for Bad Credit
When considering loans for bad credit do not set your expectations too high in regards to how much you can apply to borrow and how long you can spread the cost of the loan.
Lenders are not going to be willing to hand you a large sum of cash and risk that you will pay it back over several years. Realistically you might expect lenders to offer you smaller sums of money for short periods. In doing so, that you can prove you are a reliable lender. Providing that you repay the loan as agreed in full and on time.
If you apply for and get approved for a small loan this will help lenders to restore their faith in you and may improve your credit rating and chances of borrowing with better rates at a later date if needed.
You might be worried about lenders checking your credit rating but do not be overly concerned. Lenders realise that the majority of people who apply for payday loans have a shady credit history. While they will make a credit check, they will not look as deeply into it as they might if you were applying for thousands of pounds.
The Types of Loans Classed As Being Very Bad Credit Loans
While there is not a specific loan with the term “loans for bad credit”, there are two types of loans considered loans of this nature. These are the short term loan and the payday loan. These are the two types of loans offered if you see loans for bad credit advertised.
As mentioned before no one with very bad credit is going to be offered a loan of thousands of pounds to be spread out over several years. This is too big a risk to the lender. The short term loan and payday loan both offer low sums of money and have to be repaid back in the short term. How short the term depends on the loan you choose and the amount of money needed.
Do You Need A Loan For Three Months Or Less?
If you want a loan over a very short term, one to three months, you might want to look into applying for a payday loan.
With a payday loan, the lender will generally offer a sum of money in-between £100 and £500. Many people who apply for payday loans do so due to their having being met with an outlay that is unexpected, such as a bill they had forgotten about or repairs to a vehicle that broke down.
An Example of the Unexpected Raising Its Head
When met with unexpected costs such as the ones above your life can be thrown into turmoil. Imagine how you would manage without your car on a daily basis if it broke down.
If it broke down away from home, you would have to call someone out to tow it and take it to a garage. You then have the tow costs and repair costs to cover. This is all well and good if you have money in the bank to do so. However, if funds are low you are going to struggle to find the money.
If you left your car where it was, you would have to pay for travel back home and this could add up to a lot depending on how far away from home you broke down. Not only that, you have to pay for travel on public transport and this is not cheap. When payday comes around you still need to pay out to have your car recovered and repaired.
In the above instance you could have applied for a payday loan and if approved have money the same day to pay for the outlay and get your life back in order. When weighing up the amount the loan would cost over one to three months and how much it might cost in travel expenses, a loan might work out cheaper.
This type of loan is the easiest of the very bad credit loans to find approval for with a bad credit rating and get money fast.
A Short Term Loan For Up To 12 Months
If you need up to £1,000, perhaps more with some lenders, you might want to go for a short term loan.
You will be asked to choose the term of the loan when applying, generally up to 12 months but some lenders might allow you to spread it out over longer. Spreading the cost of the loan does bring the loan repayments down slightly each month but take into account more interest is added onto the loan.
When applying for a short term loan with a very bad credit rating the APR will be greater than someone with good credit would be offered. This takes into account that lenders see you as a bigger risk. Of course, we do work with lenders who offer some of the most competitive rates for people with adverse credit. Lenders make sure that loans are affordable to those requesting them and consider current circumstances.
Very bad credit loans are aimed at giving people with a bad credit rating a chance to borrow a small amount of money over a month or so. Short term loans are another option for borrowing with a poor credit rating and we can attempt to match you with a lender from our panel of lenders.