Meet Tiffany.
She is a senior finance executive at a lending company in the UK.
With this blog, you might get to understand a little bit about her ideas on bad credit loans.
A bad credit score and the issues it brings are serious money trouble in the UK.
Knowing how to manage it matters.
In order to get the best financial life and steady cash flow, your credit score gets to be a very important thing.
Although the quick availability of money can solve the problem in a snap, it is also true that not everybody has got an inflated amount in their bank accounts.
So, a bad credit loan might be the solution.
“And it’s the best solution. I know that my own family dealt with this issue when I’d been a kid. I learnt that little plastic card comes with problems. Although later I realised that credit cards are handy and useful in getting you things in an instant, they are again subtle things you need to manage.”, Tiffany said.
“When you’re not financially aware of credit card norms and ways to use it, you end up paying more…as that’s basically what happens with everybody…we all want to buy and store things, right? (smiling)…so, you take a credit loan…okay, a bad credit loan (chuckling)…and you use it to make all the due payments you had. You got your credit score up, right? Now, you repay the bad credit loan in time. With this, you have got your credit score fixed even more. Isn’t that a better way to rebuild the score than using cash money?”, she ended.
Top 5 Bad Credit Loan Types You Mustn’t Forget
On asking Tiffany about the bad credit loans and how one may afford them, we learned that there are purposes to that.
She said, “It depends on what cause demands a solution of this kind. You can easily go on taking a personal loan as a bad credit loan to repay few of the debts and rebuild your credit score. However, if you’re stuffed with debts and you’re low on income, then a very bad credit loan of the secured type is good for you. Before you go for the loan, you must evaluate your circumstances.”
Discussing with her, we got to know 5 of the most important bad credit loans, on which you must have proper knowledge before deciding to borrow.
And these loans are:
- The Common Personal Loans
- The Secured Homeowner Loans
- The Secured Logbook or Loans Held Against Your Car
- The Flexible Instalment Loans
- The Relaxing Guarantor Loans
Let’s learn a little bit about all these loans.
The Common Personal Loans
The common personal loans are common and, therefore, the popular ones in the group of personal loans.
These loans are called personal loans, or for a more subjective sense, the personal bad credit loans because they are unsecured loans.
These unsecured loans are popular because they come in a wide range of amounts from 1000 pounds to 25000 pounds or, sometimes even more than that with some special conditions.
A worthy advantage of these personal loans is that they come with fixed interest rates.
Although there are personal loans for bad credit with high-interest rates, many bad credit loans exist with moderate interest rates and other options to reduce monthly instalments.
A personal loan is also a good option since it can be repaid using extended repayment options.
The Secured Homeowner Loans
Let’s suppose you want a lot of money and don’t want to pay high-interest rates.
Well, in that case, a bad credit loan as a secured homeowner loan will do just fine.
Often a homeowner loan is called a mortgage as it involves your home as collateral.
It means your home will be held against the loan you are taking. But you can still use it.
If you cannot pay off the bad credit homeowner loan in time, your lender takes possession of your home, resulting in a foreclosure.
But that’s rare!
Most homeowner loans are considered very bad credit loans with astoundingly long repayment duration from 20 to 25 years.
Luckily you also get seriously low-interest rates with such loans like 2.36%.
The Secured Logbook Loans Held against Your Car
Logbook loans are a form of secured loans where you pick your car as the collateral instead of your home.
Although they come with a bit high-interest rates, a logbook loan can give you the flexibility of a personal loan and a secured homeowner loan.
With loans like these, you share a part of your car’s ownership to your lender, who will take possession of the car if you cannot repay the loan in time. However, you can use the car when your lender borrows you the money.
You will be required to sign what you call a ‘Bill of Sale’, registering which your lender can give the lender permission to possess your vehicle without a court order in the High Court.
The Flexible Instalment Loans
These loans are flexible as they come with several options.
These personal loans for bad credit come with the definitive monthly instalments you have just known.
But they also have different interest rates and repayment durations depending on the reason you are taking them for and on particular circumstances that may demand alternating interest rates and repayment duration.
The Relaxing Guarantor Loans
A very bad credit loan may find relevance with a guarantor loan.
The fact is that if you have a very bad credit score, chances are you might not be able to get loans.
However, with a guarantor, that might not be a problem.
A guarantor can be anyone (someone from your family / friends) or a financial organisation, an institution that agrees to repay the amount of the loan you took out, or the rest of it in case you fail to repay the first time.
To Conclude
Before taking any of these loans, make sure you have learned more about their monthly instalment amounts, percentage rates, APRs, etc.
Consider talking to a finance professional if need be.
And, above all, do compare different lenders to find the best loan with the ‘most affordable rates and favourable terms’.