How To Get A Short Term Loan If You Have Bad Credit
Having a blot or two on your credit history can be inconvenient when it comes to asking for a short term loan. And it can happen easily – a few late payments on your mobile phone contract or credit card bill, or maybe you hit a rough patch financially and ended up with a County Court Judgement (CCJ).
Fortunately, some lenders do make provisions for people who have a bad credit history, but want to take out a loan. It’s not all good news though – interest rates vary widely, some lenders will try to lock you into a long term agreement, while others might demand so much form-filling that by the time your money comes through, it’s too late.
It’s also worth noting that a bad credit loan might help you to rebuild your credit score.
If it’s a short term loan you’re after, you have several options, each with pros and cons:
Existing bank
- might be sympathetic, want to keep your business
- form-filling, credit check required
Other sub-prime lender
- will undoubtedly be interested in your custom
- interest rates could be high, credit check required
Payday Loan
- quick and convenient
- very high interest rates, can have hidden or unexpected charges
Pawnbroker or similar
- local and convenient, asset secured, so no credit or affordablity checks
- you have to do without the item until you’ve paid off the loan
Logbook Loan
- quick and convenient, competitive lending rates
- you need to own your own vehicle
Credit union
- competitive interest rates, small loans available
- form filling – detailed credit history required
Tips for borrowing with bad credit
- Go to an established lender with a good reputation
- Compare their level of customer care as well as their interest rates
- Make sure their terms and conditions are clear – and you understand them
- Opt for a secured loan (like a Logbook Loan or a pawnbroking loan) for the best interest rates
- Don’t get quotes from multiple lenders who will run a credit check and leave a footprint on your credit history
- Check they are regulated by the Finance Conduct Authority (FCA) and a recognised trade body like the Consumer Credit Trade Association (CCTA)
Sensible borrowing
People apply for a Logbook Loan or other form of short term personal loan for various reasons – a temporary cash flow issue, an unexpected cost, an emergency. If you do need a fast and affordable loan and don’t want your credit score to affect your decision, then this may be a suitable option for you.It’s important that you know where to get help if you find that cash flow is becoming a serious monthly issue, or you think you have a debt problem. There are plenty of places you can get free advice about debt and money management – try the Money Advice Service or Step Change for example, or make an appointment at your local Citizens’ Advice Bureau.
If you do need a fast and affordable loan but you’re worried about your previous poor credit history, vist our page, how Logbook Loans work, to find out if this type of short term borrowing is suitable for you.