Unsecured loans for bad credit are loans that are specifically created for people with an adverse history without the need to secure against property. These bad credit loans UK are also known as personal loans, tenant loans or cash loans.
Unsecured bad credit loans UK are designed to offer flexible borrowing opportunities to those who have previously been turned down for a loan due to CCJs, arrears or simply having a bad history due to missed or late payments. They are suitable for both home-owners and tenants alike as they do not require any form of security to guarantee the repayments.
Because they represent a greater risk to the lender interest rates / APR may be higher than a secured loan and the amount they are prepared to lend is likely to be lower – you may struggle to find a lender prepared to offer a loan of more than £25,000 without security.
Get an unsecured loan with bad credit.
Unsecured loans for bad credit are also sometimes known as personal loans. These loans allow you to borrow money without giving your lender security (such as your home or your car) against the loan. This means it is much more difficult for a lender of an unsecured loan to repossess your home or your car if you don’t keep up with your loan repayments. An unsecured loan basically therefore means that the lender relies on your promise to pay it back.
A bad credit unsecured loan doesn’t require any collateral and, therefore, no security is needed in return for the loan. This makes an unsecured loan available to everyone – tenants, living with friends and family and homeowners alike – you don’t need to own a property to apply.
Obviously, with the value of the loan not being guaranteed against the value of any property owned by the borrower, the unsecured loan represents an increased risk to the lender, therefore many high street lenders will now only lend, on an unsecured basis, to those with a perfect history.
Whatever your history – good or bad – interest rates may be higher on an unsecured loan due to the obvious increased risk the lender is taking in not having its value secured against any of your property. The lender is taking a bigger risk in lending without security, add to that the increased risk of lending to those with a bad credit history and one can understand why interest rates for unsecured bad credit loans will be higher … sometimes significantly higher. These personal loans however, do tend to offer fixed interest rates which means you’ll know exactly how much you have to repay each month regardless of any changes to interest rates in the wider market.
Unsecured loans are still available for those with a bad credit history and there are a number of specialist lenders who focus solely on this market. There are also a number of bad credit loans UK brokers who will tak a single application to a panel of bad credit lenders (often hundreds at a time) to find a lender who is prepared to lend and the best interest rates and terms for each individual situation.