Unsecured loans have always been harder to get than many other types of finance, because by their very nature they offer the lender less security than other products, so in the current market is it stil possible to find unsecured loans for people with bad credit?
Unsecured Loans are a form of financial assistant that can be obtained without being secured by any form of collateral. For this reason, they are a very popular form of financial assistance. This type of loan is perfect for individuals who do not own their own property as well as for tenants, students and even homeowners who don’t wish to risk their own property. To qualify for this type of loan, Credit checks are made by the Financial Services to ensure that you are a ‘trustworthy’ investment to the lender. Lenders neutralise the huge amount of risk involved in this form of lending by presenting loans which have much higher interest rates, shorter loan amounts/terms and less flexible options. Unsecured Loans are very much a ‘last resort’ option and great if you need the money to fill in the gap of short fiscal need. They also often come under various guises including: ‘Personal Loans’, ‘Tenant Loans’, ‘Pay-Day Loans’ and ‘Car Loans’ to name but a few. This is because Unsecured Loan payments can be used for almost anything, from unexpected healthcare expenses to paying for that dream holiday or ideal car.
Another benefit of obtaining an Unsecured Loan is that it can be a quick way to obtain much needed cash, payments can usually be made on the same day as the submission of the application and it’s risk free in regards to your property. Such loans are usually provided in small amounts with a short repayment term. Larger loans, over £10,000, can usually be taken over longer terms, for example between 5 and 10 years. With an unsecured loan, the maximum lending amount is typically £25,000 from most UK Lenders. Depending upon the lender, unsecured loans can be quite flexible, some incorporate payment breaks and others allow the borrower to repay less when necessary and more when they can.
As mentioned above, an unsecured loan is determined by the consumer’s credit history, which is not so great news for people with bad credit. Not to worry though! With the recent introduction of the ‘Guarantor Loan’, individuals with bad credit can obtain quick cash like everyone else. Guarantor Loans are a type of unsecured loan which require you to have someone (a family member/friend) to take care of the debt, someone who can help you out if you have trouble paying by taking responsibility of the debt; they guarantee the loan. This type of loan is also ideal for young people and students and it’s rapidly becoming one of the most popular finance products in the market today. For most lenders, the guarantor has to be at least 21 years old, a homeowner and have a decent credit history. It is important to note that a Guarantor Loan is assessed solely on the guarantor, not the borrower, so no credit checks will be made on the borrower.
Obtaining an unsecured loan is still extremely difficult however, especially given the current economic climate, as discussed above, lenders have only recently re-entered the market and are much more wary of who they lend to. Nonetheless, most Lenders can be found online, for example, online Guarantor Loans usually provide loans of around £3000. Although, the increased absence of lenders in the market means it’s all the more important to research all the options available for your circumstances. Lenders recommended by a financial advisor are likely to be much more reliable than some of those found online.
It has recently been claimed that over the last 6 weeks, lenders have increased the average rate of interest by 1%, sparking concerns that the banks are attempting to trick customers into giving away more money than is strictly necessary. This is surprising with the current base interest rate being at its lowest ever level at 0.5%. Over one million consumers are said to have opted for an Unsecured Loan last year in a bid to consolidate their outstanding debts. However, if loan interest rates are rising, it may end up where Unsecured Loans are no longer an affordable option for many. As with all types of loan, it is strongly recommended that you consult a financial advisor before agreeing to an online unsecured loan. As a borrower for this form of loan, you must be a full British Citizen and be over the age of 18.