The answer to this question is somewhat complex, as the best loans for bad credit would depend on many factors. The most suitable loan would depend on the situation of the borrower, the amount they wanted to borrow and the term they wish to pay back the loan over. As you can see, there is no single type of loan that would be the best for everyone with bad credit. However, we will show you the choices of loans and you can then determine the best loan for your circumstances.
We work to match up those with bad credit who want to take out a loan, with lenders offering some of the most competitive rates and who take into account the borrower’s ability to repay more than their credit rating.
We work alongside an extensive range of lenders who are prepared to consider people regardless of their credit score. The different loans that might be offered for people with bad credit include:
- Short term loans;
- Guarantor loans;
- Personal loans.
How Much Can You Expect to borrow?
The lenders we work with take your ability to repay the loan into account more than what happened in the past to earn you a poor credit rating. The amount you might be in a position to borrow may depend on several factors. These include how much income you have coming in each month and what your outgoings are. The lender needs to make sure that you can afford the loan.
Typically, you may be in a position to borrow between £100 and £5,000 with our lenders. The best bad credit loans may depend on the circumstances in which you want to borrow the money.
The Short-term loan is a Popular Choice
For instance, if you have a sudden emergency a short-term loan could be applied for to borrow a small cash sum which you can repay in as little as three months. Loans such as these are usually the most popular of them all for emergency cash and in many cases the easiest to be approved for if you have bad credit.
This is because the loan is small and repaid back fast. Therefore, the lender is not risking as much as if you had taken out a loan for many thousands of pounds. In the event that you need to get your hands on a larger sum of money, and you have a poor credit rating you may be better off applying for a guarantor loan or personal loan.
The short term loan is usually quick to apply for and quick to pay cash into the bank once the loan has been agreed. You do not require a guarantor for this type of loan and all the paperwork is accomplished online.
Guarantor Loans May be the Best Loans for Bad Credit
If you have a very bad credit rating the only choice, open to you may be a guarantor loan.
This type of loan may be the only option for anyone who has been repeatedly turned down for credit in the past. Approval is more likely as you need to have someone that guarantees they will take over the repayments of the loan if you find you cannot pay it back.
This means that the lender has someone to fall back onto if you cannot repay so the risk to lending is minimal.
On the downside, you have to find someone who trusts that you can repay the loan and who is willing to take on the responsibility if for whatever reason you find you cannot meet the loan repayments.
This type of loan is worth considering if it is the only option left available to you.
A Personal Loan May be An Option
A personal loan may be an option depending on how bad your credit rating is. Again, our lenders don’t put too much focus on your credit rating, they take into account your verifiable income and ability to repay the loan.
The personal loan usually offers access to a larger sum of money, up to £5,000. You choose the amount you need and how long you wish to repay it over. Our lenders typically offer loans repayable over 36 months.
Personal loans generally come with a fixed or variable APR. With the fixed APR, you know exactly how much you are going to have to repay. When comparing personal loans, check for fees associated with the loan. Some lenders may include an early repayment fee. This fee is paid by you in the event you can pay off the loan early. You can save on interest by repaying the loan earlier but only if there is no early repayment fee.
There is no one loan suitable for people with bad credit. All of the loans our lenders offer may be suitable for bad credit. The loan that is more suitable for you is the one that offers the money you need, over the term that you want, and which is affordable to you.
The lenders we work with offer competitive rates on all loans for people with bad credit, based on the individual’s circumstances. All lenders are ethical and will check to ensure you can afford the loan, they will also check your credit file, as all lenders in the UK do. While you might have a less than perfect credit rating, this does not mean you cannot get a loan.
Bonsai Finance can help to match those looking for the best loans for bad credit with lenders willing to provide loans for their circumstances. Use our loan calculator today to find the most suitable loan and lender for your needs.