Bad credit loans constitute a wide range of loans usually aimed at people who have poor credit history. The past actions such as missing payments, defaulting, or filing for bankruptcy are some of the reasons that constitute getting bad credit loans. These loans normally come with disadvantages such as higher interest rates or it may require you to secure your available property against the loan even where security for loan is not required. More information about bad credit loans can be found by visiting Click Finance: www.clickfinancial.co.uk.
Note that there is a difference between bad credit and no credit. No credit actually means you have not taken on any form of loan and therefore have no credit history. Bad credit does not mean you cannot find a lender who can accept your request for a loan but it means your options are limited with relatively high interest payments. There are several types of bad credit loans which include the following:
- Personal loans. It involves borrowing a smaller amount, may be ranging between 1,000 dollars and 25,000 dollars for a period of one to seven years. It has fixed interest rates implying that you actually know what you will repay.
- Guarantor loans. It involves an agreement with a third party who will ensure that the loan is actually repaid. These kinds of loans works similarly to personal loans with the main difference being the presents of a third party.
- Homeowner loans. Here, your home is used to guarantee your payments. The lender can repossess your home if you are not in a position to repay back. It has variable interest rates and the repayment period can be up to 25 years.
- Installment loans. This involves paying a set amount over a certain period of time. These can be personal or guarantor loans.
- Title loans. This is where you secure the borrowing against your car. Failure to repay the loan causes your car to be taken away by your lender as a way of settling the debt.
Bad credit loans attract high interest rates. Interest rates offered depends on your credit history which means what is advertised by the bank or by the building society as the possible interest rate may not be actually what you will get. Applying for several loans can damage your credit-rating because the lenders do not like to see that you have been rejected for several times. Note that sometimes your credit history may not be the only consideration to be put into an account by the lenders but they may also consider your job, salary, stability and other assets.