If you are looking to buy a car, then you will possibly find yourself in the situation where you need some financial help. Cars can often be expensive and many people will borrow money to pay for one. This can be a good idea because it means that we will be able to get a car that is better, more fuel efficient, needs repairing less often and therefore even though we might pay more for it, it could offer us better value for money. However, by paying more the car it could mean that we will be unable to afford it without borrowing the money to do so.
If you do decide to borrow the money, then you will have all sorts of loans that you could possibly choose from. You may, however, wonder which will be the best for you to use. There may be loans that you have heard of and you will know how they work. However, you may also find that there are some loans that you do not know about. These could include bad credit loans. These loans are not offered by traditional banks but you might find them useful in certain circumstances.
What are bad credit loans?
Bad credit loans allow borrowers which have a poor credit rating. What this means is that if people have been turned down by traditional lenders they will still take them on. Lenders will look at your credit report and judge whether they will be happy to lend to you, based on things they see on the report. Each lender has different criteria that they use to judge but it is likely that they will be looking for borrowers that have repaid loans in the past, that are capable of making regular payments (such as rent or utility bills) and that they have a good income. If a person does not fulfil these criteria then it is likely that they will be turned down for the loan. However, a bad credit lender will not mind. They do not check for this sort of thing and will therefore lend out regardless of this.
They do lend smaller amount of money though. As their borrowers are riskier, they will not want to give them huge amounts, just in case they cannot repay it. Therefore, they rend to lend between £100 and £1000 and they may want a borrower to repay a smaller amount before they will be prepared to pay out more money.
As the sums borrowed are relatively small, they will also be repaid quickly. This can be great because it means that the debt does not hang around for very long. However, it can also mean that you will have to repay fairly big amounts each time you make a repayment. If you choose a payday loan, then you will have to repay in one instalment on your next pay day and if you choose an instalment loan you will pay it over a longer period of time. Paying back a big amount at once, means that you will need to be sure that you have enough money available to do this. You should have just been paid, but you will also need to make sure that you do not have lots of other repayments or bill payments going out at that time. You will also need to make sure that you are left with enough money to pay for everything else that you need.
What can I use bad credit loans for?
There are some loans which have specific purposes and therefore they can only be used for buying certain things. However, a bad credit loan does not have this sort of restriction. If course, you will be restricted by the amount that you can borrow. If you are looking to buy a house, for example, it will not be enough but if you need to pay for some groceries then should find that you will be able to borrow enough money to cover it.
It is also important that you do make sure that you will be able to repay the loan. As mentioned before, it does come out on the day that you are paid, but you need to make sure there will be enough funds available. It is wise to actually calculate how much you will need, not just to repay the loan but to pay for everything else that you will need to buy. If you have enough then it will be safe to go ahead with the loan.
It is also always a good idea, with any loan that you take out to compare the different lenders. They will vary a bit and you will need to make sure that you are choosing the right one. They will vary in how much they charge but also in how you need to repay and what the lender is like. It is a good idea to think about what you want in a loan and a lender and compare them so that you are sure that you are getting the best value for money.