Types of Loans Available to People with Poor Credit Ratings in the UK

In case one is going through financial difficulties or is currently having past credit problems, it is possible to think that you will not qualify for a secured or personal loan. Bad credit loans is a term that is widely used and which is directed at people who have a poor credit history and who may be struggling in obtaining an ordinary loan at high street banks. These loans typically come with high rates of interest or demand that you provide something as security against the loan such as a house or a car.

In the context of university students, a Guarantor UK is the third party, such as a close relative or a parent based in the UK who acknowledges paying rent in case you as the international student fails to pay it. When you provide a UK Guarantor, the agency or landlord may take up permission in checking if the guarantor can pay rent through carrying out a credit check or checking on their annual income through the documents that the guarantor provides. The document that the guarantor signs set the legal obligation that he has in case the tenant gets into arrears.

The no guarantor loans or unsecured loans offer peace of mind and relief in a situation that is financially stressful or when you urgently need some money. The following are some of the reasons why the Guarantor UK loans have generally become popular in the country:

•Cash is readily available with easy terms of loans at anytime

•The unsecured loan is free from all kinds of fees

•These types of loans are available for all persons regardless of whether he is a tenant, home owner or bad credit holder

•These loan types are given as no guarantor loans for bad credit and are available to those people with a history of bad credit

•For the no guarantor loans, there is no need for credit verification

The following are some of the loans available to people with poor credit ratings in the UK

• Personal Loan:

Personal loans are some of the most common types of loans and entails borrowing an amount between £1,000 and £25,000 over a period of 1 to 7 years. There is a fixed rate of interest which then means that you will always be certain of the amount that you will be expected to repay. For instance, in case you borrow an amount of £5,000 at 40 % interest rate over a period of 3 years, the monthly repayments is £224, hence totaling the repayments to £8,054.

• Guarantor Loan:

Guarantor loans work in a similar way as personal loans. However, they also involve third party agreements and in most cases a friend or a family member who acts as the guarantor to ensure that the loan is repaid. The guarantor is held responsible in case payments are defaulted and in this case he pays it back. This could be the only way of borrowing in case you have a bad credit history.

• Homeowner Loan:

Though different from a personal loan, a homeowner loan is normally used for guaranteeing payments, hence enabling you to borrow a bigger sum of money. However, this means that a lender may reposes your home if you cannot afford to repay it. The rates of interest vary and the period of repayment may get to 25 years.

• Instalment Loan:

A guarantor or personal loan is also known as an instalment loan since you repay a stipulated amount of money every month over a specified time period.

• Logbook Loan:

Through this loan, the borrowing is secured against the car. If you therefore fail to repay the loan, the lender may take away the car in settling the debt.

The major advantage of bad credit is that you are indeed able to borrow money, which you would not be able to do due to your credit history. Another benefit is that having a loan may indeed help people with bad credit rating in repairing their credit status. This is due to the fact that if payments are always made on time, this proves that you can responsibly manage your money.