Bad Credit Personal Loan - what is it?

A bad credit personal loan is a loan that has a higher than normal interest rate and this is because of the risk associated with the lender of giving money to someone who has adverse credit. This adverse credit can come from bankruptcy, a poor credit score or CCJs.

 

 

Will a Bad Credit Debt Consolidation Loan help?

If you do have bad credit and want to raise some cash via a personal or a secured loan, you will need to bare in mind that you will probably almost certainly get knocked back and have your applications rejected.

 

If you do manage to source a lender who will give you the loan then the lender will certainly specialise in bad credit loans. As such you will find that either they charge a very high rate of interest for the loan or they may require that you use your home as collateral (in the case you apply for a bad credit secured loan) and falter on monthly payments (obviously this only applies to homeowners).

 

If you owe money to many nasty money lenders and they are vying for your blood every month, then it may be in your interest to get a debt consolidation loan and pay all of your debts off and then you can concentrate on just one outstanding debt. This will help to save time on dealing with lots of different money lenders but on the downside, a bad credit loan will have a higher interest rate than other loans so you may end up paying more on interest than you were previously to all the other money lenders.

 

Careful consideration is also needed to look into loan length (for secured loans) and the amount of money that you can afford monthly, it may well turn out that by getting a debt consolidation loan that your monthly outgoings will decrease. As with anything however, check your finances and make sure you can afford what you are taking on before agreeing to it.

 

Why is the interest so high on a Bad Credit Loan ?

People who are looking for a loan who have bad credit, represent extra risk to the money lender and are likely to receive a higher interest rate than somebody who has always paid his bill on time. The lenders feel more ‘secure’ with the higher interest rate as it will potentially offset any risk of you defaulting in payment.

Alternatives to getting an Adverse Credit Loan?

If you dont think that you could afford to take on a bad credit loan then if you go to our personal finance guide then there are some practical steps to help to try and get you out of debt.

However if you are looking at bankruptcy then it is best to arrange settlement as this actually helps to start improving your credit history and credit score because in the eyes of the finance companies you are not ignoring the problem. If you start with focus and set yourself goals to achieve, i.e curb impulse buying and adjust your monthly payments to pay over the minimum payment then over time this will help to restore your credit.

 

I have a finance plan, can i still get a bad debt loan ?

The truth is that if you are determined and focused to clear your debt and stick to a plan then even somebody with the worst credit history may still obtain a credit card or secured loan.