Having bad credit can ruin your chances of being approved for credit. Generally, lenders find it difficult advancing credit to people with a poor credit rating. People with a poor credit rating are deemed as financially irresponsible and therefore face problems whenever they are in need of credit. To this end, they have been forced to seek credit from lenders that don’t attach a lot of importance on their credit score. If you have bad credit, you will agree with me that securing credit or a loan from high street banks in the UK is an exercise in futility. It’s almost impossible unless you have a guarantor with a healthy history or an asset you can pledge as security.
However, you need not fret as there are a number of options you can go for and get the much needed credit at short notice even if you have bad credit. What are some of these options?
Going by the name, logbook loans are the kind that requires you to pledge your car logbook as collateral. You basically approach a lender, express your interest in getting a loan and receive the much needed cash after providing your logbook as security. Generally, in order for your car to qualify as collateral, it needs to be in good condition, it needs to be free of any financing and to have been on the road for less than 10 years. This is something that logbook lenders take very seriously and therefore if you need credit on short notice even if you have bad credit, then you need to take the aforementioned very seriously.
The moment you express your interest for a logbook loan, your lender will evaluate the value of your car for the purposes of determining its exact value or the amount of money you qualify to be advanced by using your car as collateral. Using your car as collateral, you can apply for a loan of up to 75% of your cars value. You will sign a bill of sale agreement with your lender that temporarily makes him the owner of your car for the term of the loan. However, you will continue using your car as you make repayments. The good thing about logbook loans is that your credit score doesn’t play a role in determining whether you get approved or not. The bad thing is that the interest rates are very high and you can end up repaying twice the amount you borrowed. Also, if you fail to make repayments, your lender can repossess your car.
As the name implies, payday loans are advanced and repaid on your next pay day. They are unsecured loans that ordinarily last between 7 and 28 days. However, according to the arrangement you have with your lender, you can have the loan extended to cover even 3 months. Like logbook loans, you need not have a perfect credit score to be approved for a payday loan. However, the biggest disadvantage is that the interest rates are very high and if you don’t take care you might find yourself deep in debt. Payday loans are good especially when you want emergency cash as they are always approved within hours and your credit score doesn’t come into play.