Can you avail a loan with a bad credit? The immediate reply would have been a firm ‘no’. However, it is a ‘yes’ since now there are bad credit personal loans available for you. Puzzled? Read on.
Under normal circumstances, whenever a person applies for a loan, their credit history is checked to determine the ‘credit worthiness’ of the borrower. This means, that people with a bad credit history are not considered for loans since they tend to be unreliable. Commonly, this is because they tend to repeat their mistakes rather than learning from them and mending them. Therefore, a bad credit may play the devil’s role in getting your loan request cancelled.
Bad Credit Personal Loan
Taking into account the number of people with a bad credit history and the unpredictable economy, lenders understand the fact that a bad credit score may not necessarily be the borrower’s mistake. Realizing this fact has given rise to bad credit personal loans. They are customized to suit those with a low credit score or a bad credit history. They are the perfect solutions to help you tide over when you are in need of funds for various needs.
There are two types of loans in this category:
1. Secured Bad Credit Personal Loan
2. Unsecured Bad Credit Personal Loan
Secured loans for bad credit are the ones that have a collateral clause in them. In other words, the borrower must put a collateral against the loan such as car, house or a savings bank account. With this, the borrower can make use of the equity stored in their property. The amount secured usually varies from £5,000 to 75,000. Under special conditions, the lender may grant a loan up to 125% of the property value. Generally, the repayment term varies between five to twenty five years.
Unlike the secured ones, in this, the borrower need not put any security against the loan. It is meant for tenants since they do not own a property. However, house owners can also apply for an unsecured bad credit personal loan if they do not wish to put their property at risk. This form of loan is popular since it gets approved very quickly without too many hassles such as valuation of the borrower’s property equity. You can avail a loan upto £25,000 and repay them in a time period varying between six to ten years.
No matter whichever loan you choose, you must choose the best lender who can match your expectations and needs. The most popular way of doing this is the Internet since it is easy, fast, comfortable and reliable. You can collect the quotes from different places, compare them and choose the best quote available.
Although bad credit personal loans can help you fulfill your wishes in the best possible way, it is mandatory that you use these loans wisely. One word of advise- use them to repay your old debts so that you improve your credit history. This will not only help you in availing better loan deals, but also paves the way for a debt-free life in future.
The writer, Howard Daniels, loves to blog about credits, loans and finance. He shares great insights about about bad credit personal loans