Getting a loan with a good credit history is beyond your imagination, not that it is impossible. Most of the time you face rejection with a reason that your credit score is not up to the par. You come across this surprise as you have never looked at your credit report, you never took seriously your financial obligations and the like. Well, let bygones be bygones.
Your credit score is not stellar and you need money. Whereas the market is flooded with several short-term loans, choosing the best deal is like finding a needle in a haystack. Of course, you will not like to further damage to your credit report. So you will have to consider pros and cons of each loan offer. You are likely to be offered guaranteed payday loans, text loans and instalment loans, but you will have to make do with more expensive options than those who have a good credit score.
As far as it is about lower interest rate deal, you can avail them only in case of a good credit history. However, you can get manageable loan offers that fit your budget. Here are some options you can consider while taking out a loan with a poor credit rating:
If you need a small amount of loan, you should consider payday loans with guaranteed approval. These loans require neither collateral nor guarantor. If you need money to have your car repaired or a laptop repair, these loans will be suitable. These are a few hundred-pound loans and hence they come for very short period. Lenders usually provide these loans for maximum two-week period. You are liable to repay your debt on the next payday. As the due date approaches, the amount you have owed will automatically be deducted from your account.
When you apply for these loans, the lender will run only soft credit check. These inquiries do not show up on your report. It is crucial that you borrow money as per your need so that you could settle whole of the debt in one go. Payday loans carry flat interest rate that means early repayment will not save you any money.
Text loans and payday loans are almost similar. The only difference is that the disbursal limit of text loans is smaller than payday loans. These loans also charge flat interest rates. You can apply for these loans whenever you need money urgently. All you need is your cell phone. You will just text the amount you need and funds will be transferred to your account. Payday loans require you to have a full-time job, but you can apply for text loans even if you are unemployed. However, you will have to show another source of income.
Instalment loans are much more affordable than any other bad credit loan. Repayment terms for these loans are longer than two-week period. It may vary from one month to 12 months depending on the amount you borrow. You do not have to pay back whole of the loan in lump sum. Each instalment will go toward both the principle and the interest. Since these loans carry ongoing interest rates, you can save money if you make the instalment before schedule. However, you make sure that the lender does not follow the clause of prepayment penalty. Otherwise, you will not be able to save any money in interest.
Getting a bad credit loan might be difficult even if the lender has a policy to entertain bad credit borrowers. There is no guarantee that the lender will approve your loan application. In this case, you can secure your loan. bad credit loans are usually unsecured but title loans are secured by a car. Your vehicle will serve as collateral. However, make sure that you have settled your auto loan completely. These loans will help you get funds at a lower interest rate. Note that not all lenders provide these types of loans.
Each lender offers different types of bad credit loans. To avail the best loan offer, make sure that your credit score is at least fair. Try to repay your debt on time. Rollover loans may throw you in a vicious circle of debt.