A simples guide

Loans for bad credit

Even if you have bad credit, you could still get a loan from a variety of sources. You may have to be flexible on the interest rates, provide security in some form and your choices may be limited, but there is always a way to access funds if you really need to. 


What types of loans are there for people with bad credit?

The first type of loan is a straightforward and traditional personal loan for people with bad credit. These are often available on a fixed rate and with interest rates currently lower than they have been in years, the repayments can be attractive. With a personal loan you can typically borrow between £1000-£25,000.

This is an unsecured loan, so your credit rating might be an issue and you may be encouraged to take income protection to cover you in case you cannot meet the repayments. There are still lenders willing to do business with you, though, so get in touch with them today.

Another alternative is a guarantor loan, where you get a close friend or family member to guarantee they will repay the loans. Be aware that if you cannot make the payments then the lender has the right to go after your guarantor for the money, they essentially agree to pay back the loan if you can’t. So you should think about this point carefully. If you’re confident you can make the repayments, then a guarantor loan may be a perfect solution for you.

The homeowner loan is the last one on the list and it’s the one you should take most seriously as your home is used as security. Your home is at risk if you don’t keep up the repayments, but you may be able borrow a much larger amount. So if you’ve got a dream for a new business, this could set you on your way.

Do I need a guarantor to apply for a loan?

No (not unless you are applying for a guarantor loan). There are a huge number of companies competing for business and you should run a quick comparison to find the best option to suit you. Some companies offer ‘no guarantor’ loans for bad credit so you should be able to find a deal that suits you, even if you have no regular income. There is always a compromise and you may have to pay more interest without a guarantor, but there is a way. 

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What are the risks of getting a loan when you have bad credit?

Every loan comes with a risk. You should always make sure you can afford to make the repayments. If you don’t, you or your family could end up heavily in debt and you could lose your car or, in the worst case, your home.

There are loans for bad credit that you can access. So if you are sure this is the right move for you then the next step is to make sure you get the best possible value and your repayments are as low as possible.

Check out the various alternatives and run a comparison on our site of loans for people with bad credit and see how much you could save.

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