When you have a poor credit score and you need a personal loan, expect to get rejected or refused especially by major banks and high street lenders in the UK. Because of your history of CCJ or default, lenders are likely to entertain you considering the high-risk financial position you’re putting them in. Thankfully, there are loans suitable for people with bad credit.
Unsecured loans, which do not require any collateral or security of any kind, are convenient loans people with bad credit can easily avail. Not only are the requirements minimal but your credit score is rarely a factor when it comes to your loan approval. So long as you have a steady source of income and you live in the UK, you can easily avail the following types of unsecured loans:
Payday loans are arguably the most popular unsecured loans available in the UK. It’s popular across the UK not only because it promises quick cash but also because of the controversies surrounding the financial product. Like its name suggests, payday loans are loans offered for fully employed borrowers who can’t avail a loan elsewhere because of bad credit. But while convenient, payday loans can be very costly. You can borrow between £100 up to £1,000 payable on your next paycheck. The downside is its high representative APR of 1,000% or more.
Like payday loans, guarantor loans are suitable for people with bad credit because it does not require any credit checks. Instead, what you’ll need as borrower is a guarantor with good credit to co-sign the loan agreement with you. Even if you have a poor credit rating, you can still avail the loan and borrow larger amounts typically from £1,000 up to £15,000 depending on your provider. Approval is also expedited for guarantor loans because there’s little to no risks involved on your lender’s part.
If you’re a credit union member might as well take advantage of said membership by applying for a personal loan. As a member, you’ve been paying deposit money to the credit union, which entitles you to an emergency loan. The process is fast and the best part is the lower interest rates as opposed to what a payday loan may cost you. Loan amounts are not very generous but it also ranges from £500 to a couple thousands of sterling pounds. It’s ideal for a wide range of financial emergencies.
Peer to peer loans
Another type of loan that does not require any collateral is peer-to-peer loans. Rather than borrow from a bank, this type of loan system lets you borrow directly from the lender. That means no middleman hence lower interest rates. Lenders, however, may require you to have good credit. But there are also some lenders who lend money to people with bad credit. You just need to prove that you’re financially able to repay the loan as agreed upon.
If you’re looking for quick cash and convenience, you might consider getting a doorstep loan. Rather than go to the lender, providers of doorstep loans go directly to the borrowers. There’s no need to leave the comforts of home to avail this type of loan. You can apply from home, receive the cash and repay the loan through a debt collector.
Credit cards are another type of unsecured loans that offers you quick and convenient cash. You can use it for cash advance, for instance. Just remember that credit cards come with steep interest rates. If you’re going to use it meet a financial emergency, be sure to have a repayment plan ready.