The UK market has increased availability and accessibility for bad credit loans throughout the years, with the recession causing a significant economic downturn and more debt for people. A guarantor loan is just one of the many options you can explore when you have bad credit and in need of money, but there are other loans as well that can offer you quick cash access.
Payday loans are extremely popular loans for bad credit, due to the fact that they can be obtained quickly and easily. With payday loans, you are basically borrowing against your salary, promising to repay the loan in full upon receiving your income.
Payday loans are credit check free, meaning you are guaranteed a loan so long as you have enough income to meet the loan repayment. Usually, you will be required to pay within 15 days up to a month, depending on when you should receive your next pay cheque.
Short Term Loans
Short term loans are different from payday loans in the sense that these are installment loans, and you are not required to pay off the loan in full.
Your income and affordability will be taken into consideration to assign a loan duration and installment amount that will best fit your financial circumstances. The said repayments will then be automatically deducted from your debit card or bank account on the agreed repayment dates.
Some short term lenders may request for you to pass certain credit checks, but most of the time, you may still be offered a loan. However, the interest rate of your loan will depend on how bad your credit rating is.
Doorstep loans are just like short term loans with a twist. Instead of the cash being automatically paid to the lender via your bank account or debit card, the lender’s agent will visit you at your home every week to collect the repayments. This is ideal for those who do not have their own bank accounts/debit cards, and those who earn their income every week.
Meanwhile, a logbook loan differs from the rest because this one is a secured loan, involving the borrower’s car as collateral. The borrower submits the vehicle “logbook” and signs the “bill of sale” in order to transfer the vehicle’s ownership to the lender during the loan’s duration.
While the lender becomes the legal owner technically, the borrower can keep the vehicle even while the loan is still in force, provided that repayments are paid regularly. The borrower can then take the logbook and ownership back after paying off the loan. Logbook loans may be ideal for those who need a larger amount of cash, since unsecured loans will typically limit the amount you can borrow.
Basically, the concept behind all of these loans is that the borrower should meet the repayments on time, and in order to prove that, you must be earning a decent amount of income for the loan you’re applying for. While credit checks may not be needed for most of these loans, affordability checks will certainly be performed to ensure that you will not be financially troubled because of the repayments.