Bad Credit Loans

A bad credit loan is a way of borrowing money if you have a bad credit score or poor credit history. It is possible to find out what your credit history is like by doing a credit check. Maybe in the past your have defaulted on payments or have County Court Judgments (CCJ's) against your name.

Many lenders will offer loans for people with bad credit but usually at a price. There are two types of bad credit loans and these are an unsecured bad credit loan and a secured bad credit loan.

An unsecured bad credit loan is where the borrower does not have to put anything up for collateral only sign to say that repayments will be made. The advantage is that the borrower can get a bad credit loan without the risk of losing any personal effects, however the interest rates on these types of loans are very high, sometimes almost to the maximum allowed for consumer loans.

Secured bad credit loans means that the borrower has to put something up as collateral in case payments are not met. The interest rates on this type of loan will be lower than that of an unsecured bad credit loan but if the borrower defaults then their possessions are at risk.

There are several options where a borrower can obtain a bad credit loan and the best thing is to shop around. High street banks offer a variety of loans as well as the regular accounts and other banking services. Another port of call is a finance company that specialises in bad credit loans. It will probably be easier to get a loan with one of these companies but again the interest rates will be higher. Online lenders can keep their costs down so interest rates may be cheaper and you also have the opportunity to look at the loan policy when applying.

On the whole, it may be advisable to seek advice from a financial adviser before entering into a financial commitment if you have had credit problems previously.