When you have a poor credit score, loan application approval is less likely. Fortunately, there are now quick and easy alternatives such as logbook loans. Even with bad credit, you can apply for a logbook loan so long as you’re a vehicle owner. Then there are also other types of loans such as payday loans and guarantor loans, which do not require any security or collateral. Whichever type of loan you apply for, the best part is the no credit check requirement.
If you have a poor credit score and you’re looking for a handy and quick solution to your financial problems, here are quick comparisons of the different types of bad credit personal loans at your disposal.
Logbook loans, as mentioned above, are secured personal loans. This means a security or collateral is needed for the applicant to be eligible for the loan. Obviously, you must also be of legal age and a UK resident to avail the loan. When eligible for the loan, you can borrow from £500 up to £50,000 at repayment terms from 12 to 36 months.
Guarantor loans, on one hand, do not require any security or collateral. You just need to meet the basic requirements plus the guarantor requirement to apply for loans from £1,000 up to £10,000 or more. The typical repayment terms for this type of loan range from 1 to 3 years. Approval for this type of loan is faster than logbook loans because there’s no security involved. You just need to make sure you have a qualified guarantor who’ll back you up with your loan application.
If you can’t find a guarantor and you only need a small amount fast, applying for a doorstep loan rather than a logbook loan or guarantor loan makes sense. With doorstep loans, you can borrow from £50 up to £1,000. The best part about this type of loan is the fact that the lender goes to you instead of the other way around. You don’t have to leave the comforts of your home to avail the loan. You can apply, get approved and receive the cash right on your doorstep. There’s just one downside, the interest rate is pretty steep for doorstep loans.The average representative APR for the loan is typically around 1,500% or sometimes more.
Another unsecured loan that promises quick cash within hours is payday loans. The loan, as its name suggests, lend you money if you have proof of your recent pay check. Loan offers usually range from £100 up to £1,000 payable within 30 days or on your next pay check. Like doorstep loans, payday loans come with steep interest rates. The representative APRs for such loans start from 1,000%, which is inclusive of your loan’s interest rate, admin fees and more.
If you’re looking for a personal loan to avail but have bad credit issues, the aforementioned loans are ideal alternatives for your financial needs. Because the loans are specific for people with bad credit, the interest rates are generally higher than a standard personal loan from major banks and high street lenders.
If you’re going to pick one from the list, remember that each type of loan has its set of pros and cons. Logbook loans, for example, are for people with vehicles they can use for security while guarantor loans are for those who have a guarantor willing to co-sign the debt agreement. Either way, you just need to remember that taking out a loan should be carefully planned. And as a rule of thumb, always borrow only what you need and can afford.