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How Do Bad Credit Loans Work?
What can a bad credit loan be used for?
Most bad credit loans can be used for any purpose, including home improvements and debt consolidation.
There is also a range of car specific loans available to people with a poor credit history.
If you are looking for a bad credit loan to purchase a new car; car specific loans for people with a poor credit history do not require any property to be used as security on the loan, so you will be considered for the loan even if you are not a homeowner.
What are the different types of bad credit loans?
There are three main types of bad credit loans, secured loans, loans specifically for purchasing a car and payday loans.
Secured bad credit loans
Secured bad credit loans can be used for any purpose. They do require you to be a homeowner, and the loan will be secured on your property.
A secured loan uses the equity in your property to determine how much money you can borrow, and also how much you can afford to repay each month.
Secured loan repayments can usually be spread over a period of up to 25 or sometimes up to 30 years. This makes them an affordable option for borrowing larger sums of money.
Bad credit loans for purchasing a car
Car specific loans can often help people with a poor credit history get the finance they need for purchasing a new or used car.
Some car loan lenders will also provide the car you buy, but they will have a large range of cars to choose from.
Bad credit payday loans
Payday loans offer people in any financial circumstance to borrow a small amount of money until payday.
Payday loans can help in the case of any unexpected bills or urgent payments that you may need to make before you are paid your monthly salary. They will allow you to borrow up to £750, which is then repaid on your next payday.
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