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Best kind of loans if you’ve got a bad credit rating

Having a bad credit rating is not something that can be very limiting when it comes to getting a loan. But not to worry, there’s a lot you can do to counter this. Lenders are in plenty and there are multiple kinds of loans you can go for to increase your chances of success. In this guide, we discuss some of the best loans to go for.

HELOCs

This simply stands for ‘home equity line of credit.’ It’s a loan you take when you’ve got equity in your home. They remain some of the most sought after loans for people with bad credit simply because they’ve got reasonable interest rates and zero restrictions on what to do with the money. However, you risk losing your home when you fail to pay the debt in full.

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Bad credit loans

Some lenders focus on giving bad credit loans to their customers. They are tremendously easier to qualify for when your rating is low. But you need to be careful when taking these kinds of loans. Have the amount you need and can pay for before you apply. Taking a huge loan can trap you in an endless cycle of debt as they have considerably high interest rates.

Credit unions

Credit unions are easier to work with. They are more relaxed and don’t have rules as strict as the ones found in banks. With credit unions, you’re more likely going to be accepted when you’re part of the union. Joining credit unions is also an easy process, and they’ve got lesser fees and interest rates. A good tip is being involved in a union with the same interests as you. For instance, if you’re a teacher, you could participate in a teacher’s credit union.

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Secured loans

Secured loans are also available for people with poor rating. Apart from having your home as collateral, you could also have other assets such as your car as in the case of logbook loans. In fact, with logbook loans, your credit rating may not even be put into consideration when determining if you’re qualified for the loan. You may also have a much longer repayment period with lesser interest rates as compared to unsecured loans.

Co-signed loans

Co-signed loans can assist you in getting a loan by using someone else with a better credit rating. If you’ve got a willing family member or close friend, then this may be your best move. The lender would base your application based on your co-signers score, so it’ll be a lot easier to score a deal. However, these kinds of loans can stain your co-signers credit rating if you’re not prompt enough or miss payments.

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Secured loans for bad credit | All you need to know

Lenders are becoming increasingly picky about the people that qualify for secured loans. If you’ve got bad credit, then you may have suffered a couple of rejections as the rules are becoming even tighter.

But not to worry, just because your credit score is poor doesn’t mean that you can never get your hands on a loan. There are a number of lenders out there that have specialised in serving clients with tainted scores. Here’s a guide to help you out.

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What’s a bad credit secured loan?

For starters, this is simply a loan designed for individuals that have a poor score. The amounts to borrow can vary depending on your lender and your property’s value. For really large amounts like £100,000, you may be required to pay over a very long timeframe such as 20 years.

The loan is borrowed but you’ll have to provide your property as security for your home. Typically, the lender takes ‘possession’ of your property which may cause you to lose it if you don’t pay the loan back in time.

Usage of the loan

A good thing about such loans is that they can be used for most things. You could buy assets such as vehicles or caravans, pay for a holiday in Hawaii or even use the money to plan your wedding.

These loans are also suitable to pay off a large number of more expensive debts as you can borrow large amounts for long periods.

Advantages of these loans

Bad credit secured loans have a couple of advantages.

For starters, they’ll help you repair your credit score. This is particularly helpful if you’ve got a bad credit rating, and you wish to get back on track. All you have to do is pay the monthly repayments fully and on a timely basis.

These loans also have a less rigorous eligibility criteria. Applying for one would give you a much higher chance of success as compared to applying for other secured loans.

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Due to having your home as security, the loans are also a lot less expensive as compared to other kinds of loans. The reduced risk for the lender further makes the loan even more flexible. They can allow you to have a longer repayment period and borrow more money.

Need any help?

If you’re looking for a loan and have had multiple failed attempts at getting one, then feel free to contact us. We make it our business to offer customers the best loans for the best prices.

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