As we all know, lenders will most likely look into your credit score first before giving you their trust. However, with all the economic crises, it’s hard to keep your credit in good standing. However, even if you’re credit is in pretty bad shape, it’s not the end of the world. There are actually alternatives to borrowing money from traditional lenders which won’t really care about your credit rating.
Â Payday loans are one of the most popular types of short term, bad credit loans in the UK. As the term suggests, payday loans are loans meant to be settled by the borrower on the next payday.
Â Payday loans are unsecured loans, which means no collateral is necessary to get approved. The borrower only needs to provide proof of employment and income. The longer his employment history, the better.
Â With payday loans, the borrower is expected to write a post- dated check for the lender to cover the loan and any interest. If the borrower fails to pay on the next payday, it will be rolled over to the next with additional charges.
Logbook loan is another means to borrow money if you have bad credit. However, unlike payday loans, logbook loans are secured loans, meaning collateral is needed in order to borrow money. With a logbook loan, the borrower uses his car as security against the loan. Logbook loans do not require any credit checks, and usually, money will instantly be available. Logbook loan applicants typically get approved and bring home their money within 24 hours of successful application. Another upside with a logbook loan is that you can keep the vehicle, despite it being used as collateral.
Peer to Peer Lending
Â Peer to peer or P2P lending is an online platform for lenders and borrowers that has been increasing in popularity. With peer to peer lending, you can meet different lenders and get access to different loans, mostly unsecured ones. Unlike being confined to banks and credit unions that will almost surely reject your loan application if you are in bad credit standing, you’ll have more chances of approval with P2P lending. This is because you are actually dealing with people, and although you don’t actually know these people, most of them can give you more sympathy and let you borrow despite your credit score.
Seek the Help of Family and Friends
Â If all else fails, it may be worthwhile to try tapping into friends and family members for help. Even if you’ve been rejected everywhere else, people that you actually know may give you a shot and lend you money in good faith. However, it would be nice to return the favor and not let them down, since you are putting your relationship at risk.
On the other hand, if people close to you cannot give you the financial aid that you need, they still can help you by acting as a co- signer. If you know someone who has a good credit rating, it might improve your chances of getting a loan if you have a guarantor. Likewise, you need to hold up to your end of the bargain if you don’t want your lender to hunt down your relative or friend.