The Loans Given to Those with Bad Credit
These loans are generally designed to work as a safe haven for those individuals who have had a few hiccups along the way in their credit history. They may have had medical issues in another country or a spouse who was irresponsible with their finances. Whatever the reason, many people have bad credit and the result can often be debilitating.
The loans given are usually loaded with much higher APR than regular loans given to those with good credit to ensure the banks do not incur undue losses. Usually they also have a minimum amount to be borrowed, somewhere around £5,000 for secured loans on homes and other property. The terms are also variable and can be as short as a year and as long as 30.
Secured vs Unsecured
There are a couple of different forms of loans that are available as well - both secured and unsecured. For the most part, those with bad credit can only acquire secured loans , and for good cause. Because they have not demonstrated a history of responsible repayment, it is important that the bank has some form of collateral to balance the loan against. Usually, at least 25% equity is required on property to assure the approval of a loan.
Unsecured loans are rare for those with bad credit and when they are received, the APR, fees, and terms are usually less than ideal.
Getting a Loan
To get one of these bad credit unsecured loans , it is important to know what your options. The first and most simple is to get a pay day loan where the borrowed amount is ensured by the amount of your previous paychecks. When the next paycheck comes in, it is used to repay the loan. Additionally, it is still possible to go to a traditional lender and seek a loan when you have bad credit, but these lenders are still less likely to accommodate due to banking tradition. Regardless, if you have bad credit and are in need of a loan to help make ends meet, your best path is to seek out a bad credit loan that will meet your needs.