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Money
Page > Loans
> Bad Credit Loan - UK Guide
In a
nutshell A loan for consumers with a bad credit
history.
Best
Loan for People with existing or past financial
problems. A bad credit loan can suit anybody in this kind of
situation who cannot raise finance via standard loan
products
Loan
Amounts Typical borrowing amounts will vary widely
here from a few hundred pounds up to £100,000+. The amount you
can borrow will be different with every lender and will also
depend on the type of loan you take out (i.e. secured or
unsecured) and on what you want the money for. Also, your
lender will probably base your borrowing assessment on your
income and outgoings to assess what you can afford in
repayments - which in itself may dictate how much you are
allowed to borrow.
Loan
Period Typical loan periods for bad credit loans
will again vary depending on the lender you choose and the
type of loan you choose. Average loan periods start at 1 year
and can go up to 25 years+.
Loan
Advantages If you have bad credit then you may
find it difficult to be accepted for a standard loan deal. Or,
if you are accepted, you will be expected to pay higher
interest rates because you will appear as a risk to most
lenders. This isn't an issue with a bad credit loan which is
specifically designed to help people with bad credit problems
raise loan finance. You are virtually guaranteed to have a
loan application approved with this kind of
product.
What to
look out for You will be charged extra in interest
rates with a bad credit loan - although this specialist
product should be charged at lower rates than those you would
get from a standard lender that would accept your application.
So, it's wise to shop around to see what kind of rates are on
offer. You need to be aware that your interest rates may rise
to even higher levels depending on how bad your credit rating
actually is. You also need to be aware of the terms and
conditions attached to your bad credit loan. If you can, make
sure that they are as flexible as possible. You don't, for
example, want to be paying extra redemption penalties if you
ultimately find that you can repay your loan early. In this
type of loan, it can also be useful to build in payment
holidays to cover you for the odd month here and there where
money might be particularly tight. If you already have a bad
credit rating then you really do need to make sure that you
can afford your repayments as comfortably as possible. If you
take out a secured bad credit loan and then stop making your
payments then your lender has every right to have your home
repossessed to recover your money. Even an unsecured loan
option will allow them to take legal action to get their money
back. At the very least this will just make your credit rating
even worse and cause you untold problems down the line. You
can, however, take out payment protection insurance at the
same time as your loan if you're worried about this.
Alternatives You may
prefer to try and find a standard lender that will accept your
application - other than that, this is probably the best
option for people with bad credit problems.
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