Has your bank turned you away for a loan because you have bad credit? This is because you are considered a high-risk party and financial institutions do not want to work with you. However, many are the people who find themselves in bad credit from situations out of their control. Therefore, you should never give up because there are indeed many other alternatives you can use to get bad credit loans.
Consider applying from credit unions
Credit unions are not-for-profit organizations that operate to help communities. In the UK most of the credit unions charge 1% to 3% and will give you a loan if you join their organization. However, some might have some conditions such as listing into their membership and saving for some time before being allowed to borrow. Check the nearest credit unions to learn about their conditions before applying for a loan from them.
Social Fund Budgeting Loans
Social Fund is a government operated method of lending to United Kingdom citizens. Local authorities operate the fund in Wales, Scotland, and England. The social fund budget loan is interest-free and is targeted to help local citizens for cold weather payments, winter fuel payment, death-related benefits, and maternity grants. Visit your local authority website or physically check into their offices to learn more about the loan.
Go for secured loans
Even if your credit score is poor, many financial institutions will be willing to lend you the needed cash if you provide collateral. You can use your house, car, or even jewellery to secure a loan of equal value. By providing collateral, you lower the financial institution’s risk because the property can be auctioned if you default. The good thing about secured loans is that they attract low interest and you can be allowed to pay for a longer period.
Lenders of last resort
- Payday loans: This is a very easy way to get a loan fast. The lenders will rarely turn you down and are also willing to roll the loan repayment from one month to the next. However, their bad credit loans interests are usually very high and could easily grow into the unmanageable level. When you decide to go for a payday loan, be prepared to strictly pay on time.
- Pawnbrokers loans: These are lenders who are willing to give you the cash you want if you deposit a high valuable item. In the UK, they usually prefer gold and diamond jewellery which they quickly sell if you fail to repay on time. Just like the payday loans, pawnbrokers offer their credit at a very high interest.
- Doorstep lenders: These are also called home credit lenders and are always willing to offer you credit right at your home. Their interest rates are usually high and you should always be very careful with them. Take time to check if they are registered, check experiences from past clients, and use a legally acceptable agreement that outlines the amount, interest, and period of repayment. Do not fail to get the details of the lender, and more importantly, commit to repaying the money within the agreed period.