Bad credit loans

Credit ratings influence almost all aspects of borrowing, especially so when it comes to loans; if you were to apply for a loan with a bad credit rating, it's likely that most lenders would turn you down.

Bad credit doesn't mean you can't get a loan however; you just need to look at other options, such as a bad credit loan:

Bad credit loans are high-risk loans, often with a high interest rate, that are intended for people with poor credit ratings or those that are new to credit.

If you are a homeowner, you can lower that interest rate if you opt for a bad credit secured loan; this is also a bad credit loan but because the loan is secured on your home, it would incur a lower interest rate. It also allows you to borrow larger sums of money than what you'd be able to on an unsecured loan.

Across the UK, there are hundreds of bad credit lenders, which might make the task of finding the loan with the lowest interest rate much harder.
You can ease this task by using a loan broker who would compare loans from several bad credit lenders and present you with the best options.

Things to consider

Loan term / Repayment amount
UK secured loans often have a set repayment period e.g. 5, 10 or 25 year, the lender lets you choose the period that suites you.
The longer you choose to pay off the loan, the more it will cost in terms of interest paid. For example; a loan would cost you less if you pay it off in 5 years than it would if paid off in 10 years. On the other hand, the shorter the repayment period, the higher the amount you'd be required to pay each month.

Consider your monthly expenditures e.g. mortgage, bills, credit cards, etc, subtract that from your monthly income and work out how much you can realistically afford to pay back on the loan each month.

Risk to your home
Secured loans are so called because they're secured on your home, failure to keep up repayments on the loan may result in your home being repossessed. Depending on your situation, the alternatives suggested below may pose a lesser risk to your home:

Alternatives to bad credit secured loans

1. Unsecured loan
You may consider is an unsecured loan; unsecured loans are personal loans that do not require any collateral, faltering on the loan would not directly risk your home being repossessed.
However, unsecured loans are more suitable if you have a good credit rating; unsecured bad credit loans incur much higher interest rates due to the elevated risk of having a bad credit history and no collateral.

2. Remortgage
Although similar, remortgaging might be a better alternative to taking out a secured loan;

Pros
• Taking out a secured loan creates an additional payment to make every month, whereas with a remortgage you can get the money you need and keep making the same mortgage repayments.
• You don't necessarily have to move lenders, it is possible to release some equity from your home and keep the same mortgage lender.

Cons
• Remortgaging sometimes involves switching lenders, a process that would take a lot more time than arranging a secured loan.
• If you have a very bad credit rating, you might not be able to remortgage with a mainstream lender, poor credit lenders often charge higher interest rates. If you need to borrow small amount of money, a bad credit secured loan would most likely be a cheaper option.

3. Bad credit cards
Although they typically have higher interest rates, there are several reasons why a bad credit card might be a good alternative to a bad credit loan:

• Approval is quicker; usually within days unlike a bad credit loan which may take up to a month.
• There's no fixed repayment term, unlike loans, you may pay excess and reduce the overall interest.
• You may re-borrow the money you've paid back.

Related to bad credit loans:
Bad credit remortgage - Adverse credit loans - Credit cards for people with bad credit - Low interest debt consolidation loans - Loans for people with bad credit