Bad Credit Loans

Interest rates are going up, but if you're looking for a loan, then there are still some good deals around.

However, if you suffer from bad credit then be careful. A lot of lenders base the interest rates on your credit rating (known as 'risk based pricing). This means that the better your credit score, the better the interest rate you'll get. Because of this system you won't know what rate you'll end up with until you have completed your application. This means that borrowers with bad credit could end up paying a higher rate of interest than what has been advertised by the company.

When taking out a personal loan you can either go for a secured or unsecured loan. Unsecured loans allow you to not provide any security, such as your home, against the borrowed money. A secured loan is usually backed by your property, and while the interest rates tend to be lower than unsecured loans, they usually have a higher minimum advance and longer minimum terms. Your home may also be at risk if you fail to keep up repayments. An arrangement fee is sometimes also charged by the lenders. If you own a property and are happy to use it as security, it may be worth remortgaging.

Pros
Good for budgeting due to fixed monthly repayments.
Generally, the larger the loan the lower the interest rates, making personal loans good value for larger amounts.

Cons
Although you can pay off the loan with a lump sum, some lenders charge up to two months interest for doing so.