Bad credit loans – the facts
If you have been refused a traditional loan because of your current financial status, you may need to think about applying for a bad credit loan. It’s worth remembering that although every lender looks at your credit record when you apply for a loan, they all make their decisions on a different basis, so when you have been rejected by one lender it doesn’t necessarily follow that every lender will act in the same way. However, each refusal to lend also appears on your credit record, so to reduce the appearance of these refusal notices, you could apply for a bad credit loan instead.
What’s the difference between bad credit loans and ordinary loans?
The main difference between these two financial products is that a bad credit loan is likely to have a higher interest rate than a traditional loan. This is so that the lender can ensure that they’re getting paid back as soon as possible, covering them for the risk they’re taking in granting you a loan. Secondly, you may not be able to borrow as much when you take out a bad credit loan. Bear this in mind when you apply, because you may have to settle for less than you’ve asked for. Again, this is the lenders’ way of ensuring that they’re not taking on too much risk when they lend money to you.
Bad credit loans, like their normal counterparts, can be secured or unsecured. A secured bad credit loan will use something you own, usually your house, as security against non-payment. This means that if you fail to repay your loan, or you miss a significant number of payments, your house may be at risk. An unsecured loan does not use anything you own, but if you fail to pay back your loan, your lender can still file for bankruptcy against you. Many lenders are wary about lending unsecured money to those who need a bad credit loan, so you may find that this type of product is more expensive.
To find out more about bad credit loans, and to discuss which type of loan might be best for you, talk to an expert. If you choose someone who has access to the whole bad credit loan market, you should be able to find the right product at the right price.
Prosper Home Loans have the experience and expertise to obtain the best mortgage to suit your individual financial situation. Whether you are planning your first purchase, moving home, thinking about remortgage or debt consolidation, buying a second home, or perhaps considering a commercial venture, let Prosper help. Prosper has extensive experience in working with specialist self cert mortgage lenders, so if you’re looking for self cert mortgages or bad credit mortgages, email your query to: enquiry@prosperhomeloans.co.uk or telephone: 01424 712333 and find out how Prosper can help you.