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How to Use a Bad Credit Loan
A poor credit rating is easily contracted, but can be troublesome to shift. Not to mention the difficulty it causes when it comes to borrowing money!
There are, however, people willing to help. We have taken the liberty of gathering the lenders that offer the best bad credit loans here so you can find the best loan to suit your circumstances.
Making the most of your loan...
- Get the right type
There are three predominant types of bad credit loan available (outlined in How do Bad Credit Loans Work).
Secured bad credit loans:
The most common type of bad credit loan available; these are available for home owners only. They can offer you a larger loan with long repayment terms, as your property is required as collateral. The amount you can borrow will depend upon your ability to make the repayments and the amount of equity in your home. Some lenders will lend up to 125% of your properties market value minus any outstanding charges on it.
* Note: If you aren't a homeowner, there are some companies that offer Unsecured bad credit loans, but they are difficult to obtain as the lender has little protection over the borrowed money.
Bad credit loans for a car:
Cars are a necessity for many people nowadays, but the costs are often unaffordable (especially with bad credit). Car loan lenders have recognised this and now offer bad credit loans specifically for purchasing a new vehicle, without the need to be a homeowner.
Payday Loans:
Allow you to borrow cash in advance of your next month's salary to pay any outgoings that you won’t be able to make.
Things to watch out for...
- The unpredictability of the future
Despite wanting to pay your loan of as quickly as possible, it is important not to over stretch yourself. Although you could win the lottery tomorrow, it will be more likely that the interest rates rise.
Draw up a plan of any potential incomings and outgoings that will have an impact on your borrowing, then use our loan calculator to decide what amount and repayment period you can afford.
Compare bad credit loans
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