If you live in the UK with a poor credit rating, chances are that you are new to subprime loan searching or have an excellent understanding of the lending landscape. Here’s a quick recap. People with poor credit histories are generally declined by lenders. A bad credit score is a sign of poor credit. There are now many lending companies that offer loans to people with poor credit ratings.
Personal loan regulations in the UK vs. other countries
It is important to understand that UK bad credit loans are different from those in the USA. The UK has no maximum APR, and there is not as much regulation in the UK as you’ll find elsewhere. However, the FSA doesn’t regulate personal loans like it does debt management, so be careful how you approach the matter.
What does bad credit mean for a borrower in the UK
Only a few loans are now available for those with bad credit in the UK. The average APR is typically a lot higher than those offered by high street lenders. This can be anywhere from 40% to 2500%. These numbers can be scary, but you have options.
Doorstep loans – average APR of around 200%
Guarantor loans – average APR of 42%
Logbook loans – average APR of around 30% when you use your car as security
Unsecured loans will be the most difficult to obtain and the most costly, but lenders such as FLM Loans UK specialize in guarantor loans to people who have no security. All are welcome, including tenants and non-residents.
Finding the right lender
How do you find the best company to offer such loans? As you would in any other country, contact your family members and friends to see if they have any experience with credit. To find the right companies, use Google.co.uk. You can shortlist them according to how trustworthy you are of them, and give them a chance to speak with you to find out how professional they are. You should tick the box if they are open to listening to your needs and answering any questions. They must hold a data protection license and a consumer credit license while you are in the UK. Get these details from them, and then check the online government records to confirm that the company is legitimate.
Danger
There are many lenders that can provide bad credit loans, as the demand for them is growing. Be aware that there are many companies who charge exorbitant rates and additional fees. If you don’t have a good credit score, an intermediary agency will help you get approved for a loan. These agencies may charge a fee to locate a loan for your needs. Avoid them, but ask upfront if they are going to charge you. Ask for the written response as there are many unscrupulous lenders who will try to get you in their clutches. There are many good men out there, and some will do everything in their power to get you the best deal. You can also find great places online that will help you. I will mention these later in this article.
Dealing With Brokers
A broker is an intermediary company that helps you to find the best options and companies to borrow money at the lowest rates. Many of these intermediaries that provide loans for people with bad credit ratings have a list of lenders who offer bad credit loans. Even if your credit score is not perfect, they can help you find the best deal. It is important to clearly state the purpose of the loan when applying for a loan. A guaranteed bad credit loan may be the best choice if you’re looking to buy a car, start a business or go on holiday. To get approved for a guaranteed bad credit loan, you will need collateral or a guarantee. As collateral, you can use a certificate of ownership.
You won’t have any problems getting a loan if you meet the requirements. There are many companies that provide loans for those with poor credit ratings. Self-employed people with poor credit ratings are less likely to be approved for loans because they don’t have regular pay slips. One of the main requirements for these loans is proof of income or pay slips.
Guarantor Loans do not require credit checks and are great for those with poor credit
There are very few loans in the UK that do not require credit checks. A guarantor loan is the most popular type. It allows anyone to get loans, provided that they have not been declared bankrupt within the past few years. This works because you borrow money, but the loan is your responsibility. Someone who trusts you enough to repay the loan and is willing to make the repayments if you don’t. The main guarantor lenders FLM Loans and Central Trust will accept you for a loan if you have someone willing to assume the responsibility. It is therefore the best loan for people with poor credit.