There are lots of different loans available and it is always good to have an idea as to how they differ and what might suit you the best so that you can pick the best loan for you, when it comes time for you to need to borrow money. Some people will always ignore loans that they do not know much about, but this is not good because it could mean that you are ignoring a loan that is suitable for you. Therefore, knowing lots about the different types of loans and who they are for can be really helpful and you will be able to make the right choice when it comes to a time that you need to borrow money.
With bad credit loans, we might feel that they are a bit scary as they have had a negative press. However, it is good to understand how they work so they can decide whether they will be something that you might like to use or not.
Types of bad credit loans
There are quite a few different types of bad credit loans and they vary quite a bit in the way that they work,
- Payday loans are probably the most well known. They are designed to help people out in emergencies and money will be leant until the person get paid next and will have to be repaid in full. They are for small amounts of money up to £1,000 and can be arranged very quickly, sometimes within a few hours, so the money is there really quickly to help out.
- Instalment loans are essential the same as payday loan but they do not have to repaid in a lump sum. This means that can be easier to repay as the payments are smaller, but they will last longer and that will make them more expensive.
- Guarantor loans will allow you to borrow larger sums of money, normally between 31,00 and £10,000 but you will need to find a guarantor who will cover the repayments if you fail to. You will be repaying monthly, but if the money is not there then it will be taken from the guarantor instead.
- Log book loans will give you some money based on equity that you hold in your vehicle. So the lender will value the vehicle take off any other car loans and then lend a proportion of what is left, If you do not keep up repayments they will repossess the vehicle, sell it and pay off their loan and give you what is left so you can pay back the rest of the money you owe on it.
Who They are for?
So bad credit loans are specifically designed for people that do not have a good credit record but still need to borrow money. Often, a traditional lender will not lend money to anyone that has a poor credit record and so these loans help out instead. They can also be arranged quickly and this can be useful for anyone that needs money in a hurry even if they have a good credit record as they may not be able to get money from elsewhere. Like all loans, it is wise to find out how much it will cost and think about whether it will offer good value for money. Also think about whether you can afford to repay it and whether you really need the money that much. Compare the loans with other types and make sure that you compare lenders so that you can be sure that you are getting a the very best loan, that will suit your needs the best.