There are many things that you might try to do if you are in a financial emergency and looking for a loan could be one of them. They can be useful to give you a financial boost, but you may wonder whether there are some types of loans that will be better suited to this than others. You may know that bad credit loans can be quick to arrange and wonder whether these will be the solution that you are looking for.
What are bad credit loans
A bad credit loan is one that is designed for those people that need to borrow money but have a poor credit report. They tend to be for smaller amounts of money up to £1,000 although there are different types and so the amount you can borrow can vary. These loans are not just for those with bad credit though. So even if you do not have a poor credit record you can still apply for them and it is likely that your application will be accepted. This is because the lender does not specify that the loan has to be for those with bad credit but it is available to them if they want it.
The loans can vary in how they work. A payday loans is an example of a bad credit loan. With these you borrow a sum of money until you are next paid and then you repay it in full. There are also instalment loans where you can repay in instalments so that you can manage the repayments more easily. These can be better for those people that will struggle to repay a lump sum or who want to borrow larger amounts of money that they could not repay all in one go. There are also guarantor loans, where the borrower finds someone who is willing to make repayments on their loan if they are not able to afford to.
Are they good for emergencies?
Some types of bad credit loans will be good in emergencies. This is because some of them can be arranged really quickly. Bad credit loans came about because it was seen that there were some people that needed money in an emergency and could not get a traditional loan. This means that not only was there a need to allow those with poor credit records to be able to borrow money but to be able to get that money really quickly. Bad credit loans have evolved though and there are lots of different types so the speed it takes to arrange a loan can vary between those types.
This means that if you do need money in an emergency you will need to make sure that you choose a loan that will be fast. It is wise to actually check with the lender to find out how long they predict it will take for you to get the money that you need so that you can be sure that it will be quick. This is because as well as varying between loan types, the speed it takes to arrange a loan will also vary between lenders.
Should I Choose one?
Deciding whether a bad credit loan will be right for you can be a tricky decision. You will need to start by thinking about what all of the options you have are. Firstly, start by considering the emergency and whether it really is one. Think about whether there is any possibility that you can delay until you next get paid. Also think about whether you have any savings that you can use to pay for the emergency. Think hard as sometimes we can even forget about savings that we have. Then also think about the repayments of the loan.
It is wise to make sure that you are completely confident that you will be able to repay the loan. You will need to find out what repayments you will need to make in order to work this out. Find out form the lender how much you will need to repay and when and then you will be able to check whether this will be something that you can afford. Check you accounts to see how much you normally get paid and how much you normally have to pay out and you will be able to work out if you will have enough to repay the loan. Also remember to think about whether there are any things that you have to repay less regularly than monthly. For example, you may have a car MOT, house insurance or a lot of gifts to buy in certain months and so you need to consider whether you will have any extras like this. If you do then this will limit your ability to cover your loan repayments.