Four Loan Options That Are Perfect For Bad Credit


Before, a bad credit rating would often mean the end of the world for a person financially. Fortunately, the situation has gotten better in time and nowadays, there are a lot of options and solutions for people who have poor credit rating. You don’t need to stop living your life to the fullest and enjoy your financial freedom simply because of a past hiccup.

When it comes to loans, most major banks and financial institutions are still strict and rigid with their requirements, so getting a loan there is virtually impossible if you have bad credit. However, never fear – there are a lot of loan options that are bad credit-friendly.

Borrow from friends or family

I know most of you won’t be expecting this advice, since this is probably an obvious fact. However, it is always a good idea to ask for help from the people closest to you. Friends or relatives won’t subject you to a credit check and won’t ask for collateral (though some wise ones may ask for your phone or jewelry).

However, things can get really messy with informal borrowing. Terms might not be clear and you bridges might get burned simply because of unpaid debts. Even if you are just borrowing from friends or family, it’s always a good idea to put the terms down in writing.


Another great option is to find peer-to-peer lending services on the web. Since individuals don’t have to worry about high overhead costs like banks do, the overall interest rate and lending terms are lower and more lenient. Also, individuals tends to be less business-minded compared to lending institutions and may be more sympathetic with your situation.

Collateral and Guarantees

Usually, what a person uses as a guarantee to get a loan is their ability to pay. This ability to pay is judged based on their credit rating. So if you have poor credit rating, lenders see you as someone who might not be able to pay. So you need to put something else as a guarantee in lieu of your credit rating. You can use your home, paycheck and automobile as collateral for loans.

You can also use another person as security for the loan. These are called co-signees or guarantors. The guarantor also signs the loan agreement, and they assume financial responsibility over the loan in case you default.

Credit Unions

Credit Unions and charitable organizations are also great places to secure loans with bad credit. They are less business-minded compared to banks and more service-minded. They are more inclined to help you and see you as a human being, especially if you talk to them personally.

Read More

Common Reasons Why People Take Out a Loan


Why do people take out loans? Well, for one simple reason – because they need money. The more important question is; what do they need the money for? It’s important to have a purpose when it comes to taking out loans, because there’s a loan type for each purpose. Yes, there are loans that do well for any purpose, but there are specific loans that might be suitable for your needs and circumstances.

We’ve gathered information from lending institutions as well as personal interviews regarding the most common reasons for taking out a loan. Here we give you a rundown of the most common reasons, as well as the type of loan that suits each purpose.

  • Purchasing a home – If you currently own a home and want to move to a new home, you can take out a home equity loan against your current home to pay for your new home. Mortgages are also a viable option.

  • Buying a car – Auto loans are popular nowadays, and many car dealers are even offering auto loans as part of their financing services. It’s not a bad option to take, especially if you don’t have money to buy the car outright. Just make sure you take a look at the original purchase price, and then calculate the total amount of the auto loan. The disparity between the two numbers shouldn’t be too great, or else you’re at a serious disadvantage.

  • Pursuing your education – Education is important, which is why the UK government has several student loan options available. If you can’t get one from the government, you can secure a student loan from a private institution.

  • Setting up a business – Starting your own business can be very expensive. Get a head start on your capital using small business loans. If your local government is supportive towards start-up businesses and entrepreneurs, you can ask around for a government-backed business loan.

  • Paying off other debts – It may seem counterproductive to take out a loan when you already have a lot of outstanding debt. However, if you risk losing a lot because of your debt, you can avail of debt consolidation programs to smooth things over. This does not mean you won’t have any debt anymore. Think of it this way: using a loan, you pay off all your other debts and then all you have to worry about is paying that loan off in the near future. It’s not much, but it gives you time, especially if you’re just recovering from a financial crisis.

  • Quick cash for emergency expenses – If you need to purchase medicine for an unexpected sickness, or call a plumber after your pipes burst, you might find yourself in need of quick cash. For those emergency funds, the best sources are logbook loans, payday loans and peer-to-peer lending.

Loans are definitely a great way to solve any urgent financial problem, but it’s nice to know that there are specific types of loans that cater to specific purposes. Remember though, borrowing is a short-term solution, so use your loan wisely. Loans should do more than just solve an immediate problem; they should help make your financial future a lot more stable.

Read More

What is Peer-to-Peer Lending?


Before approaching banks and other lending institutions, people are more likely to borrow from friends or relatives first. It is a great way to gain some easy cash without having to sit through formal loan applications. However, it does have a lot of cons. If unpaid, your relationship to your “lender” is forever soured. In fact, a lot of relationships have been severed because of unpaid debts.

Peer-to-peer lending is the perfect compromise for people who feel like lending institutions are too formal, but don’t want to risk borrowing from friends and relatives. The bank is left outside the equations and it’s just you, the borrower, and the lender, another individual, involved.

Benefits of Peer-to-Peer Lending

One of the biggest benefits in engaging in peer-to-peer lending is lower interest rates. The reason why banks charge such high lending rates is because they have to think about overhead. Since individuals don’t have to worry too much about overhead, costs for that is taken out of the equation, resulting in lower rates.

Also, there are a lot of individuals offering peer-to-peer lending. While banks and other financial institutions have their reputation and experience to rake in clients, a random guy over the Internet might not have the resources to market himself to potential borrowers. This is why a lot of borrowers are competing for borrowers by offering great deals and lower rates.

Security used to be a problem with peer-to-peer lending, as most people felt hesitant about borrowing money from someone they don’t know. However, there are now a lot of websites that offer peer-to-peer lending services. These websites act as a platform for borrowing and lending under a secured server. You can look at a lender’s profile to see their feedback and reviews.

The same rules apply, though, when it comes to eligibility. If you have good credit, you can apply for an unsecured loan through peer-to-peer services. However, if you have bad credit rating, you need to put something up as a guarantee, like your car or home. A lot of peer-to-peer lenders are partnered with legitimate lending establishments if you neglect to pay your loan, these lenders will report you and you’ll get a negative mark on your credit score.

Your best bet is to find lenders through peer-to-peer lending websites because that’s where you can find the most options regarding loan payment terms, customer service, and payment methods. Because of how sophisticated these peer-to-peer lending websites are, it’s as close to the real thing as you can get.

Read More

Are Home Loans Worth The Trouble?


At first glance, home loans are a quick and easy source of cash. If you are a homeowner, it might be tempting to use your home whenever you run into some financial trouble. However, you see a lot of horror stories all over the Internet of people who lost their homes and basically everything because of home loans.

So are home loans evil? Well, of course not. It still stands that home loans offer borrowers a lot of benefits, but getting a home loan is extremely risky.

Where the Problem Lies

One of the biggest advantages of home loans is the payout, but this is where the problem lies. A lot of people put their homes up as loan security for the most minor of reasons. According to experts, it’s better to use home loans for something lucrative, like starting a business, because a business is guaranteed to bring in additional income later on. It is better used as a last resort, not the first thing you do when you’re out of money.

The problem is people think of their homes as a quick get-out-debt card, or as an ATM to be used when they need money. Generally, lenders aren’t finicky about your reasons for taking out a home loan, but ideally you should only do it for the following purposes:

  • To consolidate large outstanding debts

  • To repair, renovate and improve your home in preparation of home sale

  • To purchase a new home

  • To start a business

Small reasons and purposes will most likely leave you with a lot of leftover funds, and the temptation is almost always too much for the average bloke. Most people spend the extra money on unimportant things, while forgetting that there is a heavy consequence for non-payment: home repossession.

Also, because home loans are so popular, a lot of scam companies have appeared in the UK, trying to make money off of gullible homeowners. Most of the time, these scam companies undervalue your home, leading to a lower payout. Also, they impose high interest rates in hopes of making as much money from the transaction as possible.


All in all, home loans aren’t evil, if placed in the right hands. Because of the huge responsibility that home loans bring, it’s not for everybody. If you easily fall to temptation or fail at managing your finances properly, a home loan might be too much to handle for you.

If you really want to take out a home loan, get quotes from lenders so you have a rough idea of how much you’re going to get from it. Then create a budget, making sure each and every pound is accounted for. This will prevent you from spending it on unnecessary things.

Also, reevaluate your intentions and your purposes. If you’re going to get a home loan, make sure you put the money into something that will make it easier for you to pay it off. If all you need is a smaller amount of money for emergency purposes, you can search for alternatives instead. Logbook loans and payday loans are great if all you need is a quick boost in funds for one specific minor expense. Companies like TopLogbookLoan can give you access to same day logbook loans for emergency purposes, so you can save home loans for situations that truly count.

Read More

Defaulting On Your Loan Payments


Let’s face it, even the most financially conscientious person runs into problems and emergencies that are out of our control. While some may be minor, others can be life changing. It can clean up our savings and put us in debt. It can event prevent us from paying our existing debts.

When you are out of options and you can’t find ways to gather enough funds for your monthly payments, one viable solution is to default on your loan. However, even if sometimes it is the only way, defaulting comes at a huge price. So what happens when you choose to default on your financial responsibilities? Here are just some likely scenarios.

Your Credit Rating

When you default on your payments, the result is not instantaneous. A missed payment or two would only earn you reminders and warnings. After a month or two has passed, your lender will finally report your negligence to the relevant credit bureaus. Once reported, your credit rating will plummet. Not all loans affect your credit rating the same way. High interest and high payout loans will always give the most negative impact on your credit rating, while small, short-term loans will have a small, yet definitive impact.

Lower credit ratings mean that you’ll have a lot of trouble applying for loans and credit cards in the future. The impact of low credit rating extends outside lending institutions – don’t be surprised if finding an apartment, car insurance, or telecommunications service (mobile phone or landline) becomes difficult as well. A low credit rating means you can’t be trusted with money, so any institution that depends on trust will most likely hesitate when it comes to you.

Defaulting is Expensive

If your debt remains unpaid, the case will be escalated to collectors. You might find yourself receiving some very intimidating letters from your lenders, gently reminding you to pay your debts or else their lawyers will take action. With large debts, like those from major banking institutions, the court can rule with your lenders, and force you to give up assets and even confiscate your wages to pay for your debts.

The entire process will of course, cost you a lot of money. Not only will you be forced to pay off your debt, but most lenders will impose late payment fees and other penalties. Factor in the legal expenses you need to take care of if thing reach the courts, and you might find yourself in an even bigger financial hole than before.


Secured loans have a bonus consequence – repossession. Whatever you put up as a guarantee will be taken away from you. If it was an auto loan, your car will be repossessed. If it was a home loan, then your home will be taken away.

While the scenarios above might be scary, these are situations you might find yourself in if you are not careful enough. The best way to combat this is to take care of the problem as soon as it arises. At any point during your loan payment you feel like you will be unable to make further payments because of financial emergencies, talk to your lender and tell them your situation. Lenders will of course want you to pay the amount in full, so they’ll try to work out a solution that benefits both parties.

Read More

The Two Main Types of Loans


The services offered by lenders in the UK are so varied that they might confuse and overwhelm the first-time borrower. However, do you know that most of these loans simply fall into two categories? Most loans nowadays are just named differently and vary only slightly in terms, but the mechanics are still the same. To simplify it all, just categorize loans as either secured or unsecured.

Unsecured Loans

Unsecured loans, as the name suggests, do not require any means of security to get the loan. Because you don’t put anything on the line, you need to have a good credit score to avail of these loans if your finances are in order, and you don’t want to jeopardize or risk any of your assets, this is the loan for you.

Good credit is taken as a sign of financial responsibility, and so people who go for unsecured loans benefit from their good credit by gaining control over their payments. With unsecured loans, the payment duration is shorter and the interest rate is fixed. If your credit rating is really good, you don’t even need to pay for the first three months after getting your loan. This is called a loan holiday, which is an added bonus given to people with exceptional credit ratings.

Unsecured loans come in all shapes and sizes – not to mention names. It seems that every bank and financial institution name their unsecured loans differently in an effort to stand out. However, the mechanics are the same and these loans simply differ in interest rate, payment duration and other minor terms.

Secured Loans

Secured loans require a certain asset, physical or otherwise, to be surrendered to the lender as security for the loan. These loans are recommended for people with poor credit scores because they can’t avail of unsecured loans. To a lender’s eyes, if you have bad credit, you are financially irresponsible and are more likely to run away from your debts. Lenders trust people with good credit rating, so if you have poor credit rating and want them to trust you, you have to put up something as collateral.

You can use your home, your car and even your own paycheck as a guarantee to secure a loan. Compared to unsecured loans, secured loans are less flexible and borrowers have less control over the terms and conditions of the loan. Of course, this doesn’t mean that they can’t negotiate with the lender. Lenders will still tailor payment terms according to the borrower’s situation to make sure it’s easy for them to pay back their loan.

Read More