Personal Loans for People with Bad Credit

Until you can improve your credit score, expect hassles and even rejections when applying for a personal loan from banks. Due to your history of ccjs, arrears, defaults or bankruptcy as reflected on your credit rating, major lenders will be less than keen on taking you on. Fortunately, all is not lost when you have bad credit. If you look in the right place and apply from the right lender, you can still raise the funds you need in no time at all. Below are some personal loan options you can apply for when you have bad credit.

Credit Unions

If you're a member of a credit union, you have one source of funding to take advantage. Credit unions work just like banks offering loan options for people working in the same industry and area. This should be the first place to look into if you need quick cash. Rates are not only affordable but processing is pretty fast when you apply from credit unions provided, of course, that you meet the eligibility criteria and have the requirements ready beforehand. Money Saving Expert has more info about credit unions at http://www.moneysavingexpert.com/banking/credit-unions.

Peer to Peer Lending

Peer to peer or P2P lending is another cheap source of personal loans for people with bad credit. The scheme has existed since 2005 offering personal loans at interest rates from 6.5 to 10.5%. As the borrower, you'll have to list the amount you want to borrow along with the reason or purpose. Investors or lenders will review you listing and decide whether to lend you the money or not. As long as you meet the criteria, you shouldn't encounter a lot of problems with P2P lending.

Family and Friends

If you only need a small amount of cash for purposes like overdue bills or car repair then taking out a loan from family and friends is a good idea. With family and friends, interest rate can be low or nothing at all. Just make sure to pay it on the date you promised you would so you can take a loan again the next time around.

Payday Loans

If you've tried the three options above to no avail, checking out payday loans might work out for your situation. With payday loans, you can borrow from £100 up to £1,000. The loan is payable on your next pay check, that is 28 days from the date of said loan. The only downside with payday loans is the steep interest rate. Representative APR is at around 1,000% so it's best to consider the financial product as one of your last resorts.

Logbook Loans

For people with bad credit who owns a car and who needs larger cash than what payday loans offer, logbook loans are viable options. Depending on the official trade value of your car, you can borrow between £500 and £50,000 at a 400% Representative APR on average. Again, the interest rate can be pretty high so borrowers are better off considering the option only after exhausting cheaper alternatives.