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How can I get a loan with bad credit?

11.10.2019 by Jack H

If you have bad credit, there are still options available when you need a loan. Borrowing against your car, also known as a vehicle equity release, allows you to take out a loan without a credit check, which means your credit rating is unaffected. LoanOnYourCar.com allow you to borrow amounts from £750 to £100k, with favourable interest rates.

Whether you have a financial emergency or need money for home improvements, a holiday or a certain occasion, there are lots of reasons why you might need to take out a loan. Unfortunately, if your credit rating isn’t great then you may find the application process is frustrating, and you may be turned down instantly simply because your credit rating doesn’t meet the threshold.

However, if you have a car, then LoanOnYourCar.com can help. We can offer you a loan based on your vehicle’s equity, rather than your credit score, and offer fast cash when you need it. Keep reading for more information on how to get a loan with bad credit.

What causes bad credit?

Many people don’t know that they have bad credit until they apply for a loan and get turned down. However, bad credit doesn’t necessarily mean that you’ve mismanaged your money or missed payments. Some other factors that can lower your credit score include:

• Only paying the minimum balance or being close to your credit limit on credit or store cards

• Having no credit history – for example, if you’ve never taken out credit or have lived overseas for a while

• Not being on the electoral roll

• Being financially linked to someone with poor credit

• You’ve made a lot of applications for credit in a short period of time

Therefore, there are lots of reasons why you might need a loan with bad credit, which is why LoanOnYourCar.com offers access to credit for those in all sorts of situations. Be sure not to worsen your credit score by applying for too many loans as this can leave what is called a "footprint."

How can I find out my credit rating?

There are a number of services that allow you to check your credit rating. In the UK, most lenders use one of four credit reference agencies; Equifax, Experian, Crediva and TransUnion, or they may use information from a combination of the three. There are a number of free websites where you can sign up and see your score, but make sure you don’t give out your payment details, as some companies charge a monthly fee.

What is a logbook loan?

A logbook loan is a type of borrowing that’s secured against your vehicle. It basically means that you hand over your logbook and spare key to the lender, so if you fall behind with your payments, your vehicle can be seized without a court order.

LoanOnYourCar.com offers an alternative to logbook loans where you borrow against your vehicle’s equity. We allow you to borrow up to 70% of the trade value of your vehicle, with a fast, easy transaction process. When you take out a loan with us, you transfer ownership of the vehicle, but we don’t take the logbook or spare key, and you still have full access and use of your car. Once you’ve repaid your loan, ownership is quickly transferred back to you.

If you need money fast, you may be considering selling your car for cash. However, this could put you in worse financial difficulty as it means you may struggle to get to work and have to pay taxi or bus fares. LoanOnYourCar.com can offer you the best of both worlds, allowing you to use your vehicle as normal, yet still use it as security for your loan.

Can I get a loan without a credit check?

If you already have bad credit, then making applications for loans can make your credit worse, as it leaves a ‘footprint’ on your credit file. That’s why many people with bad credit want to find a lender that doesn’t carry out a credit check. At LoanOnYourCar.com, your loan is taken out against your car, so it remains private.

Will I have to pay lots of interest if I have bad credit?

Having bad credit means that lenders may see you as a risk, so while you can get a loan, it’ll often be at a higher interest rate. However, at LoanOnYourCar.com, we calculate your interest on a pay as you go basis, so you only pay interest during the period that the loan is live. Want to pay it off early? No problem. You can settle up any time without any penalties and save on interest.

Why do people take out bad credit loans?

There can be lots of reasons why people might need to take out a bad credit loan:

  • Financial emergency – for example, car repairs, home maintenance or an unexpected bill
  • Paying for a holiday or special event
  • Consolidating other debts
  • Needing money to move to a new house
  • Investing in your business

It’s important to consider whether the loan is needed, or whether you could make other arrangements, such as delaying your holiday or using different sources of funds. This can help you borrow responsibly and enjoy a more secure financial future.

How long does it take to get a loan?

When you have bad credit, the lending process can seem long and arduous, which is why LoanOnYourCar.com has tried to make it as simple as possible. You simply call us or fill in the online form, and we’ll arrange for one of our agents to visit you to check the car.

Usually, they can make your appointment for the same day, and once that’s done, you can have the money in your account within 60 minutes. What’s more, you can complete the loan on your car through an E-Signature online, meaning you get quicker cash and lessen the waiting time.

Will you need to contact my employer?

Some bad credit loan companies will carry out checks such as asking for an employment history, which may include contacting your current employer to verify how long you’ve been there, how much you earn, etc. We understand that this can be embarrassing, as you may not want people to know you’re taking out a loan, so we don’t contact anyone else about your loan. We carry out affordability checks that take your circumstances into account, so even if you’re self-employed or claiming tax credits, we may be able to help.

Do I need a guarantor?

Many bad credit loan providers will accept you, on the condition that you have your loan undersigned by a guarantor. There are usually strict rules about who can be a guarantor; they need to have excellent credit, be a UK resident and usually have to earn a certain amount.

Unfortunately, it can be hard to find someone willing to sign up as a guarantor, as if you stop making payments, then they are liable. It can also be embarrassing to ask people you know. Therefore, taking out a loan on your car may simply be a better alternative for you.

What happens if I get into financial difficulties?

When you take out a loan through LoanOnYourCar.com, we carry out affordability checks. However, we understand that there can be situations where your circumstances change, and you can find yourself in financial difficulties.

If this happens to you, it’s important to stay in touch with lenders as they can often offer you a payment plan or be flexible in their approach. It’s important not to ignore the problem, as this can have a worse impact on your finances in the long term.

Can I afford to take out a loan?

LoanOnYourCar.com will only offer you a loan if we’re confident you can afford to pay it back, but it’s also important for you to consider the effect that the loan will have on your finances. You should work out a budget for each month, comparing how much you earn versus how much you pay out, factoring in the cost of the loan.

If you find yourself financially stretched by taking out a loan, then it might be worth looking at other options instead. However, LoanOnYourCar.com do not have any hidden fees or charges as we are committed to offering an honest and transparent service for all to utilise.

When you have bad credit, the thought of applying for a loan can sometimes fill you with dread, as you may imagine getting endless rejections from lenders. That’s why you may want to look for an alternative, specialist lenders such as LoanOnYourCar.com.

We’ve helped many people with bad credit get the loans that they need for all sorts of purposes, and all you need is equity in your car to use as security. We aim to make the process as quick and easy as possible, so you can get the money in your account and get on with life, without the worry of dealing with endless paperwork or waiting for your payout.

CCTA

Regulated by the Financial Conduct Authority