Bad Credit Loans Demystified

A bad credit loan is a loan product designed specifically for those of us with a bad or imperfect credit history.

There are a whole plethora of reasons why you may have a less than perfect credit rating. These could include having a CCJ (County Court Judgement) against you, having been declared bankrupt or having missed one or more payments on a previous loan or other form of credit. Even if you have never had a credit card or loan in your name, you may still be seen as a bad credit risk because potential lenders have no facts on which to base your suitability as a borrower.

Generally speaking, it is nigh on impossible to secure credit from a mainstream lender if your credit score is poor. This is why there are specialist products on the market aimed specifically at people struggling with a bad credit rating. Get a loan with bad credit at Click Financial.

The main advantage of bad credit loans is the fact that they enable you to get the credit that you would not otherwise be eligible for. This can be an essential financial crutch for those who are struggling to make ends meet on a day-to-day basis. Others may apply for this type of credit to cover the cost of a big-ticket purchase, or perhaps to consolidate all their existing debt into one easier-to-manage loan.

A second advantage is that getting accepted for a loan can help to repair a damaged credit rating, provided you manage your credit responsibly. This is because as long as you keep to the terms of the repayment schedule, you will be clearly demonstrating that you are a dependable borrower, which may help to get a better interest rate on any further loans you may wish to take out in the future.

The main drawback of a bad credit type loan is that they do tend to come with a rather high interest rate. Most applicants will almost inevitably have had financial woes in the past, meaning that they represent a far greater risk to a potential lender. This means that the interest rates offered will generally be much higher than those that a typical high street provider may offer.

A bad credit loan can be either in the form of unsecured loans, which means the lender will not be able to make a claim on your property should you default, or secured, meaning that you will need an asset such as your own home to offer the lender as security.

If you opt for a secured loan, do bear in mind that while you might secure a more competitive rate of interest, your property could be at risk of repossession by the lender should you find that you are unable to make the repayments.

When you are thinking about the time period over which you wish to repay your loan, bear in mind that if you decide on a longer repayment time frame you will pay more in interest than if you decide to attempt to pay off the balance as quickly as you possibly can.