By Mitch Rice
Lending is a very widespread practice these days. People of all ages need money to buy something they have always dreamed of. They use their cars as collateral and obtain loans. As a rule, lending organisations prefer to deal with people who have good credit scores. However, there are many types of loans that you probably don’t even know that don’t check your credit score. This article will discuss all these types of loans that you can take with bad credit.
Instalment Loans
Installment loans are among the best types of loans for bad credit in the UK. These loans are highly accessible and easy to obtain, even for people who don’t have great credit scores. People with low credit scores can still get approved for an installment loan, which is a loan that’s repaid in equal installments over time.
Installment loans provide you with the money you need upfront to pay for big expenses, such as moving expenses, home repairs, or buying a new vehicle. Once you repay those expenses, your installment loan will be paid off. You don’t need to apply again or take out a new loan once you’ve paid it off. People who have bad credit often use these types of loans because they’re easier to get approved for than traditional bank loans or personal lines of credit.
Payday Loans
One of the main reasons payday loans are so popular is that they do not require any credit check. Instead, the lender only requires proof of employment (or some regular income). Since this type of loan does not require any credit check, it greatly increases the chances of qualifying for the loan you need. Not having to worry about a credit check can make it much easier to get the money you need to pay off your bills or other important expenses.
Another reason why payday loans are one of the best types of loans for people with bad credit is that they have very low-interest rates.
Auto Title Loans
An auto title loan is a secured loan where borrowers can use their vehicle title as collateral. Borrowers who get title loans must allow a lender to place a lien on their car title and temporarily surrender the hard copy of their vehicle title in exchange for a loan amount. The lien is removed when the loan is repaid, and the car title is returned to its owner. But if the borrower defaults on their payments, the lender gets to repossess the car.
Auto title loans also referred to as car title loans or simply title loans, are a type of short-term loan that is secured by your vehicle. When you take out an auto title loan, you use the title to your car as collateral in exchange for a cash loan. While this may sound risky, it can be advantageous if you’re a responsible borrower who pays back their loans on time.
Mortgages
Mortgages are among the best types of loans for people with bad credit because they require collateral. The collateral, in this case, is the home itself. The lender only has to worry about selling off the property in the event of default; they do not have to deal with collections or try to recover their money in any other way.
If your credit score isn’t great, don’t worry. You can still get approved for a mortgage with a low score. There are plenty of programs out there that will help you build up your credit to qualify for the best terms and interest rates possible, as well as educate you on all the steps to owning a home.
Secured Credit Cards
If you are looking for a new credit card and have bad credit, a secured credit card may be the best type of loan for you. Secured credit cards offer many benefits, including guaranteeing that you will be approved for the card. In addition, if used properly, they can help you rebuild your credit score.
A secured credit card requires you to pay a deposit upfront to get approved. The deposit works as collateral in case you default on your payments. The deposit amount determines your spending limit on the secured credit card. You should receive a monthly statement on the card, just like with any other credit card.
Home Equity Loans or Lines of Credit (HELOC)
A home equity loan is a type of mortgage that allows you to borrow money by using the equity in your home as collateral. Equally important, home equity loans are fixed-rate loans, so your monthly payments won’t change.
Home equity loans are an attractive borrowing option for people with good credit who can qualify for a more favorable interest rate than they could get with a personal loan. The interest on these loans may also be tax-deductible.
Co-Signer Loans
Co-signer loans are sometimes referred to as guaranteed loans because they offer lenders an added level of security. The co-signer will take responsibility for paying off your loan if you cannot do so yourself, which means that the lender will not suffer any losses should you default on your payments. The downside to this type of loan is that it puts your relationship with the co-signer at risk if you cannot make your payments on time. If this happens, it will be up to the co-signer to pay off your debt and keep their credit in good standing.
Peer-to-Peer Lending
Peer-to-peer lending is a type of loan in which individuals borrow and lend money without any financial institution. It’s a relatively new form of financing that may be more expensive than conventional loans but has some advantages.
Peer-to-peer loans can be used for various purposes, including home improvement projects, debt consolidation, and medical expenses. They are generally unsecured, meaning borrowers don’t have to put down collateral to obtain the loan. Peer-to-peer loans can be obtained online through a social lending website that matches lenders with qualified borrowers.
Credit Card Cash
Credit card cash advances are among the best types of loans for people with bad credit. A cash advance is simply a loan that you take out using your credit card as collateral. When applying for a cash advance, the process is very easy and can be completed in a matter of minutes. You simply hand over your credit card to the cashier, who swipes it in their machine and runs it through their system. Once approved, the cash will be deposited into your bank account within 24 hours!
Rent-to-Own Agreements
A rent-to-own agreement is a contract between a landlord and tenant that gives the tenant the option to buy the house after a certain period.
In most cases, rent-to-own agreements are offered to tenants who are not eligible for traditional mortgages because of bad credit or low income.
Conclusion
With these kinds of loans, you can easily access funds, and if everything goes well with the loan, you will be able to get a better credit score. It may seem like a win-win situation for everyone but things can also go wrong. You could end up needing additional funds from your emergency fund if something goes wrong with your loan. Be careful what kind of loans you take as often times interest rates for bad credit loans are very high.
