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Taking out a loan on bad credit isn’t easy. But sometimes it can be the only solution to a financial situation, especially if you have no friends or family to turn to. With banks and other lending facilities finding it hard to trust you with their money because of your poor credit scores, it’s time to look at all available alternatives.
In the UK, one of the most popular lending solutions for people with bad credit is the payday loan. This type of loan allows you to borrow money on the condition that you settle the debt on your next payday. Payday loans are unsecured, which means you don’t need to front collateral in order to get approval. All you need to show is proof of employment and income. The longer your employment history is, the better. You will also need to write the lender a post dated cheque that covers the loan amount and interests. Any unpaid debt will be rolled over to the next payday, along with the corresponding penalties.
Unlike payday loans, logbook loans require you to provide your vehicle as collateral before getting approval. Lenders don’t usually require background and credit checks before approving your logbook loan application, and you can have the money in less than a day. And even though your vehicle is being used as security against the loan, you still take it home with you and drive it. Logbook loans are a great way to borrow some much needed money despite having less than acceptable credit.
Over the years, peer-to-peer or P2P lending has become an increasingly popular online platform that allows borrowers and lenders to communicate and establish loan agreements. Most of the loans that you can find though P2P lending are unsecured. And because you’ll be dealing with real people and not a bank or some other financial institution, you are likely to get more sympathy and a higher chance of getting approval even if you have bad credit.
Friends and Family Loans
Sometimes, your best hope in hard times can be the help you get from the people closest to you. You have a better shot at getting a loan from you parents, your best friends, or even your old college roommate than you have with a bank, so it’s worth asking them for help first before you go to the bank. And when they do lend you the money, be sure to make good on your word. Pay the loan back in full and on time, run the risk ruining your relationships with the people who care most about you.
In addition, just because the people closest to you can’t loan you the money you need doesn’t mean they can’t help you in other ways. They can always trust you enough to act as co-signer to a loan that you are trying to get approval for. This is especially helpful if your co-signer has good credit. Of course, you need to hold up your end of the deal and pay the loan back, or else your co-signer ends up paying for it.
Taking out a loan on bad credit should always be your last resort. But if you really need to borrow money, it helps to know that there are decent alternatives that you can turn to in order to get you back on track.
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