What is a bad credit loan?
Even if lenders refuse you credit because of poor credit history, you could still get a loan for bad credit instead. You must be at least 18 years old and receiving a steady income from employment to receive a bad credit loan. Credit searches from loan refusals and defaults for failure to pay will make lenders less likely to approve loans. Bad credit loans are specifically for people with poor credit like this. While you are still able to get a loan, the downside will be that bad credit loans have very high interest rates. You can use bad credit loans for quick personal loans, meaning that you could still get help with financing a holiday, wedding, car, or home improvements. They are better than your bank overdraft if you would prefer to repay it over a longer term. Only take out a bad credit loan if you can repay it.
What are the types of bad credit loan?
There are a few different types of loans for people with poor credit. The lender will need extra assurance that you will be able to pay back the money that you borrow. This could be in the form of a secured loan, where you borrow against an asset of your own. If it is your house, then you could risk them repossessing it if you fail to repay their loan. Otherwise, the lender might require a guarantor before agreeing to loan any money to you. A guarantor loan means finding someone with a good credit score who will agree to provide the repayments on your behalf if you fail to do so. Slightly less common are peer-to-peer loans. These involve individuals who offer loans rather than banks or building societies. You might be able to borrow more with lower interest, but it is the individual lender’s decision.
On Stride Financial
Previously known as Pounds to Pocket, their variable loans allow more customization to suit your needs. You could get a fixed interest rate of 140% per year, depending on the total amount that you borrow and the repayment term.
- Type of Loan: Unsecured
- Loan Amount: £150 – £5,000
- Loan Term: 6 months – 3 years
- Representative APR: 315.4%
- Example: You borrow £900 over 10 months with fixed interest at 140% per annum. Your monthly repayments are £162.56, resulting in a total repayment of £1625.60. You will end up having to pay £725.60 in additional interest.
Quick Quid
You may have seen advertisements for Quick Quid on TV before. They prefer to call them “short-term loans” or “payday loans” rather than bad credit loans. They are much shorter than traditional loans and more expensive.
- Type of Loan: Unsecured
- Loan Amount: £100 – £1,000
- Loan Term: 27 days – 74 days
- Representative APR: 1300.5%
- Example: You borrow £250 for 74 days with fixed interest at 292% per annum. Your total repayment amount is £398, which means you will be paying £148 in interest. If you agree to the maximum APR it could be much more.
Satsuma
Satsuma is a popular “payday” lender. The interest rates are generally not as high as Quick Quid and you can repay over a longer term. If they approve your loan then you could also receive the money in your account that same day.
- Type of Loan: Unsecured
- Loan Amount: £100 – £1,000
- Loan Term: 3 months – 12 months
- Representative APR: 535%
- Example: You borrow £480 over 9 months with fixed interest at 131.1% per annum. Your monthly repayments will be £106.56, with a total repayment amount of £959.04. This means you will have paid £479.04 in interest.
Likely Loans
There is a much lower APR with Likely Loans, but it can actually vary from 39.9% to 99.9%. The rate will depend on your circumstances and the conditions of your personal loan. They tell you quickly if they accept your application.
- Type of Loan: Unsecured
- Loan Amount: £500 – £5,000
- Loan Term: 12 months – 5 years
- Representative APR: 59.9%
- Example: You borrow £2,000 over 2 years with fixed interest at 59.9% per annum. Your monthly repayments are £131.05 and the total amount payable is £3,145.20. You are paying £1,145.20 in added interest over this period.
Everyday Loans
This direct lender in the UK offers larger loans than most to people with bad credit. You do not even need to be a homeowner or provide a guarantor to be eligible. However, their interest rates can vary from 24.2% up to 299.9%.
- Type of Loan: Unsecured
- Loan Amount: £100 – £15,000
- Loan Term: 2 years – 5 years
- Representative APR: 93.6%
- Example: You borrow £3,000 over 2 years with fixed interest at 67.9% per annum. Your monthly repayments are £231.78 and the total amount payable is £5,562.75. You will be paying £2,562.75 in interest on top of the loan.
Cashfloat
Cashfloat is another UK direct lender which can transfer funds on the same day following approval. If you are a first-time Cashfloat customer then the maximum loan available is £500. You can get a decision within 30 minutes.
- Type of Loan: Unsecured
- Loan Amount: £200 – £1,100
- Loan Term: 2 months – 4 months
- Representative APR: 997%
- Example: You borrow £500 over 4 months with interest fixed at 270.1% per annum. Your monthly repayments come to £215.81 and the total repayable amount is £863.24. You will, therefore, be paying £363.24 in interest.
Amigo
Amigo will offer loans to people even if they have a bad credit history, including CCJs and defaults. You just have to be a UK resident between 18 and 75 years old. The catch is that you will need a guarantor with a better credit score.
- Type of Loan: Guarantor
- Loan Amount: £500 – £10,000
- Loan Term: 12 months – 5 years
- Representative APR: 49.9%
- Example: You borrow £4,000 over 3 years with interest fixed at 49.9% per annum. Your repayments would break down to £195.18 per month until you repaid a total of £7,026.48. This means that you pay £3,026.48 in interest.
UK Credit
You can get a larger loan quickly from UK Credit if you meet certain conditions. Firstly, you must not have an IVA, DMP, or bankruptcy. Secondly, you will need a guarantor who is a homeowner aged between 21 and 70 years old.
- Type of Loan: Guarantor
- Loan Amount: £1,500 – £12,500
- Loan Term: 18 months – 5 years
- Representative APR: 39.9%
- Example: You borrow £4,000 over 4 years with interest fixed at 34.05% per annum. Your monthly repayment will be £153.60 and you will have to pay back a total of £7,372.80. You will pay £3,372.80 in interest by the end of it.
118 118 Money
You will definitely have seen the 118 118 adverts on TV at some point. However, you might not have known that there is a financial branch called 118 118 Money. You could get a loan from them within 24 hours if successful.
- Type of Loan: Personal
- Loan Amount: £1,000 – £5,000
- Loan Term: 1 year – 2 years
- Representative APR: 99.9%
- Example: You borrow £1,800 over 2 years with interest fixed at 71.3% per annum. Your monthly repayments will be £142.65 and add up to £3,423.67. This total will include £1,623.67 in interest fees on top of the original loan.
Little Loans
If you only need a smaller loan, then Little Loans can provide its namesake. You could get a loan on the same day, perhaps even within 15 minutes. However, the APR rate could be anything from 11.8% to a maximum of 1698.1%.
- Type of Loan: Personal
- Loan Amount: £100 – £5,000
- Loan Term: 3 months – 3 years
- Representative APR: 49.9%
- Example: You borrow £1,200 over 3 years with interest fixed at 49.9% per annum. You will make monthly repayments to the value of £90.46 until you repay the total sum of £1,628.28. This is £428.28 in interest.
Aspire Money
If you need a broker to find you a larger bad credit loan, then Aspire Money could help you. Even if you have poor credit and no guarantor, they could find something for you. Usually, the larger the loan, the lower the APR will be.
- Type of Loan: Personal
- Loan Amount: £500 – £25,000
- Loan Term: 12 months – 5 years
- Representative APR: 49.9%
- Example: If you were able to borrow the maximum £25,000 over 3 years, with interest fixed at 12.9% per annum, you would have to repay £832.69 a month. The total amount to pay is £29,976.84, including £4,976.84 interest.
Buddy Loans
As long as you have a guarantor as your buddy, Buddy Loans can help you with a fast loan. They are a direct lender, so there are no fees for brokers. Your guarantor could receive the funds on the same day and transfer them to you.
- Type of Loan: Guarantor
- Loan Amount: £1,000 – £10,000
- Loan Term: 1 year – 5 years
- Representative APR: 49.9%
- Example: You borrow £1,500 over 3 years with a fixed interest rate of 41.16% per annum. This results in monthly repayments of £113.07 and a repayable amount of £2,023.75. This total includes £523.75 in additional interest.
Trust Two
With the backing of a guarantor, you could get a significant loan from Trust Two. You must be a UK resident from 18 to 74 years old. Your guarantor must be at least 25 years old, and you both must earn at least £10,000 a year.
- Type of Loan: Guarantor
- Loan Amount: £500 – £10,000
- Loan Term: 12 months – 5 years
- Representative APR: 49.5%
- Example: You borrow £4,000 over 36 months with fixed-rate interest at 40.9%. Monthly repayments work out at £194.55, totalling up to £7,003.80 which you need to pay. The repayable amount includes £3,003.80 in interest.
Citrus Loans
This broker can help you to find a larger loan even if you do not have the best credit history. However, you cannot have CCJs or defaults to get a loan with them. APRs can range from as little as 6.4% to a maximum rate of 1611%.
- Type of Loan: Unsecured
- Loan Amount: £2,000 – £25,000
- Loan Term: 1 year – 5 years
- Representative APR: 37%
- Example: You borrow £11,000 over 3 years and pay this back in monthly repayments of £478.47. The total that you end up paying back will be £17,224.92. Included in this is £6,224.92 of accrued interest which you must pay.
New Horizons
This is another broker which can help borrowers with bad credit to find an acceptable loan and even get the money within 15 minutes. Depending on the lender, the variable APR could be from a relatively low 9.3% to a steep 1294%.
- Type of Loan: Unsecured
- Loan Amount: £50 – £2,500
- Loan Term: 3 months – 18 months
- Representative APR: 239.7%
- Example: You borrow £500 and make monthly repayments of £167.10 over 5 months. The total that you will need to repay is £835.49. This will include the added interest of £335.49 which you accrued during this time.
