Obtaining an Unsecured Loan with Bad Credit
Unsecured loans have always been harder to get than many other types of finance, because by their very nature they offer the lender less security than other products, so in the current market is it stil possible to find unsecured loans for people with bad credit?
Unsecured Loans are a form of financial assistant that can be obtained without being secured by any form of collateral. For this reason, they are a very popular form of financial assistance. This type of loan is perfect for individuals who do not own their own property as well as for tenants, students and even homeowners who don’t wish to risk their own property. This type of loan cannot be obtained without credit checks being made by the Financial Services to ensure that you are a ‘trustworthy’ borrower. Unsecured Loans have much higher interest rates than other forms of loan as this is a way for the lender to secure his capital return. Unsecured Loans are very much a ‘last resort’ option and great if you need the money to fill in the gap of short fiscal need. They also often come under various guises including: ‘Personal Loans’, ‘Tenant Loans’, ‘Pay-Day Loans’ and ‘Car Loans’ to name but a few. This is because Unsecured Loan payments can be used for almost anything, from unexpected healthcare expenses to paying for that dream holiday or ideal car.
Unsecured Loans are ideal for those looking for a quick way to obtain capital as payments are usually made on the same day of application. Such loans are usually provided in small amounts with a short repayment term. Larger loans, over £10,000, can usually be taken over longer terms, for example between 5 and 10 years. With an unsecured loan, the maximum lending amount is typically £25,000 from most UK Lenders. Depending upon the lender, unsecured loans can be quite flexible, some incorporate payment breaks and others allow the borrower to repay less when necessary and more when they can.
As mentioned above, an unsecured loan is determined by the consumer’s credit history, which is not so great news for people with bad credit. Not to worry though! With the recent introduction of the ‘Guarantor Loan’, individuals with bad credit can obtain quick cash like everyone else. Guarantor Loans are a type of unsecured loan which require you to have someone (a family member/friend) to take care of the debt, someone who can help you out if you have trouble paying by taking responsibility of the debt; they guarantee the loan. This type of loan is also ideal for young people and students and it’s rapidly becoming one of the most popular finance products in the market today. For most lenders, the guarantor has to be at least 21 years old, a homeowner and have a decent credit history. Guarantor Loans are provided solely based upon the assessment of the guarantor’s credit history, no credit checks are made on the borrower themselves.
Despite the many options available, actually obtaining an unsecured loan is still extremely difficult today. As mentioned above, lenders are much more restrictive of who they lend to and how much they are willing to provide. Nonetheless, most Lenders can be found online, for example, online Guarantor Loans usually provide loans of around £3000. Although, the increased absence of lenders in the market means it’s all the more important to research all the options available for your circumstances. Lenders recommended by a financial advisor are likely to be much more reliable than some of those found online.
here are recent concerns over interest rates on personal loans after reports were made last month claiming that the banks were intentionally raising interest rates in an attempt to get more money off the consumer. The claims suggest that the lenders have increased their personal loan interest rates by 1%. This is surprising with the current base interest rate being at its lowest ever level at 0.5%. Over one million consumers are said to have opted for an Unsecured Loan last year in a bid to consolidate their outstanding debts. Although there are worries that if interest rates are to increase any further unsecured loans are likely to reach an unaffordable level for many individuals in the UK. In order to qualify for an unsecured loan, the borrower must be a full UK citizen who is over the age of 18. With so many different factors to consider when contemplating obtaining an unsecured loan, it is of the upmost importance that you speak to a Personal Loan Advisor in order to find the best deal for your personal circumstances.
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