Unsecured Loans for People with Bad Credit

Unsecured Loans are different to Secured Loans as they do not obligate you to put forward any collateral (property) as security against the loan. This type of loan is perfect for individuals who do not own their own property as well as for tenants, students and even homeowners who don't wish to risk their own property. Lenders place a huge amount of trust in the consumer to repay the debt according to the agreement made and one way in which the Financial Services measure this trust is by looking at the borrower's credit rating and history. The risk involved to the lender in providing this type of loan is neutralised by significantly increasing the interest rates; it is rare to find a 'low interest' unsecured loan. Unsecured Loans are very much a 'last resort' option and great if you need the money to fill in the gap of short fiscal need. They also often come under various guises including: 'Personal Loans', 'Tenant Loans', 'Pay-Day Loans' and 'Car Loans' to name but a few. This is because Unsecured Loan payments can be used for almost anything, from unexpected health care expenses to paying for that dream holiday or ideal car.

Unsecured Loans are ideal for those looking for a quick way to obtain capital as payments are usually made on the same day of application. Such loans are usually provided in small amounts with a short repayment term. Larger loans, over £10,000, can usually be taken over longer terms, for example between 5 and 10 years. With an unsecured loan, the maximum lending amount is typically £25,000 from most UK Lenders. Some unsecured loans can also be flexible, allowing you to pay less when necessary and more when you can. Others will incorporate the option to take a payment break, in the event of sudden illness for example.

As mentioned above, an unsecured loan is determined by the consumer's credit history, which is not so great news for people with bad credit. Although, unsecured loans can be obtained for those with a bad credit history through the recent introduction of a 'Guarantor Loan'. Guarantor Loans are a type of unsecured loan which require you to have someone (a family member/friend) to take care of the debt, someone who can help you out if you have trouble paying by taking responsibility of the debt; they guarantee the loan. This type of loan is also ideal for young people and students and it's rapidly becoming one of the most popular finance products in the market today. For most lenders, the guarantor has to be at least 21 years old, a homeowner and have a decent credit history. It is important to note that a Guarantor Loan is assessed solely on the guarantor, not the borrower, so no credit checks will be made on the borrower.

Despite the many options available, actually obtaining an unsecured loan is still extremely difficult today. As mentioned above, lenders are much more restrictive of who they lend to and how much they are willing to provide. Nonetheless, most Lenders can be found online, for example, online Guarantor Loans usually provide loans of around £3000. Although, the increased absence of lenders in the market means it's all the more important to research all the options available for your circumstances. Finding a real lender is often as difficult as finding the best interest rates and deals.

Controversially, recent reports imply that banks in the UK are slyly trying to make more money from customers by increasing their personal loan interest rates. According to these claims, over the last 6 weeks, lenders have increased the average rate of interest charged on their personal loans by 1%. This is surprising with the current base interest rate being at its lowest ever level at 0.5%. Over one million consumers are said to have opted for an Unsecured Loan last year in a bid to consolidate their outstanding debts. If Personal Loan Interest rates rise any further though, the country could hit further economic turmoil as unsecured loans may become too expensive for the majority of the country. Therefore, it is imperative that you seek professional advice when looking for the right unsecured loan for your circumstances. To be accepted for a most Unsecured Loans you must be a full citizen within the UK and you must be over 18.


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