Loans for people with bad credit | Personal loans
- Be a UK resident
- Be over 18
- Be in some form of employment
- Have 3 years of UK address history
A personal loan is also preferable to having your car repossessed or your house subject to foreclosure due to missed payments, or having to deal with whatever other problems you may face in the future.
For situations that are not emergencies, personal loans are not really the preferred option, although they are still usually more advisable than using >credit cards. You should generally only opt for personal loans if you really need the money and cannot get it from your savings, family, home loan, or another source that charges less interest – in short, if your only alternative is a credit card.
Personal Loan or Home Loan?
If you’re in a financial crisis now, you have to consider the possibility that your problems may be added to by another financial crisis in the future. Therefore if your finances get worse and you cannot pay back your personal loan, at least no one will auction off your house.
How Are Personal Loans Better than Credit Cards?
Similarities between Credit Cards and Personal Loans:
- Interest rates tend to be around 10% to 20%.
- Typically unsecured i.e., you don’t have to put up any collateral.
- The amounts of money involved are typically a few thousand pounds or less (and sometimes even less than �250).
Advantages of Personal Loans over Credit Cards:
- Personal loans have a fixed repayment period, with a pay-off date you can plan ahead for. You could of course force yourself to pay off your credit cards within a fixed period, but with a loan, the repayment period is based on a contract, rather than your own will power, so payoff success rates are much, much higher.
- Credit cards have a revolving line of credit. Personal loans are also known as installment loans. When you make a payment an equivalent amount of credit is not freed that you can charge against. This is another reason the average person is likely to manage to get out of debt faster with a loan.
- Personal loans have a fixed interest rate that you cannot usually raised whenever ou needed by the lender. When customers approach their credit limits, credit issuers would be inclined to raise interest rates – yet another reason the banks normally prefer giving out credit.
How to get a personal loan if you have bad credit history
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