When you encounter an emergency, you need an immediate injection of cash. Instinctively, you dip into your savings, but what if you do not have protection at all, or it is not sufficient? You will rush to direct lenders.
A loan is an alternative when you could not have enough money to meet unforeseen expenses. However, borrowing money is a challenge. Although lenders are more lenient than traditional banks, it does not mean that they will straightaway lend you money.
The application system has become highly convenient now. You have to submit the loan application form online, and then a lender will assess your application to determine if you can afford to pay back the money.
Your credit rating is what plays a crucial role in deciding your affordability. Your credit report reflects your past financial behaviour. A good credit score demonstrates your loyalty to your financial obligations. However, a bad credit rating will reflect on your credibility.
When your credit score is more useful, you will undoubtedly get money at a higher interest rate. Since you need money to fund an emergency, you would want to earn money as soon as possible, but a bad credit score can come in the way.
You do not need to worry about it as there are certain kinds of debts you can get approved quickly despite a bad credit rating:
Provident loans are doorstep loans. A lender representative would visit your home to hand in and collect money. You can borrow up to £3,000 to be paid in instalments. If you borrow a small amount, you may be asked to repay the debt in a lump sum or weekly instalments.
The APR of these loans could be very high. Remember that you will have to pay additional fees because of making arrangements for handing in and collecting money at your doorstep.
These loans are generally suitable for the unemployed and the retired. You can use these loans even if you still need an active bank account.
Payday loans
Like Provident loans, payday loans are also unsecured. These are small loans but require a lump sum payment. The length of these loans is 14 days at maximum. However, some lenders may qualify you to repay these loans in one month.
When the repayment period is about a month, you can pay it down in weekly instalments. Lenders can sign off on your application for these loans even if you have a bad credit rating. A lender will run a soft credit check, which means no hard inquiries will show up on your credit report,
It will ensure you retain your credit points further. Payday loans could carry high-interest rates because they are most famous among people with bad credit ratings. Getting rid of the debt immediately seems easy, but you may face difficulty paying it back.
As a result, you will keep rolling over the loan and eventually fall into a debt trap.
Bad credit instalment loans
Bad credit instalment loans are considered to be better than payday loans. As the name suggests, these loans aim at helping people with bad credit ratings. These loans are more affordable, although they have a high-interest rate as you will pay back the debt in fixed instalments.
Though these loans carry high-interest rates, they are lower than payday loans and Provident loans. You can get approved for these loans quickly, but it does not mean that a lender will not peruse your affordability.
When your credit rating is not impressive, you need to offset its impact by strengthening your repaying capacity. A lender will sign off on your application only when you prove that you will not make a default.
These loans are widely popular among lousy credit people as they can improve your credit score. As you will be paying down the debt in fixed instalments over some time, this shows that you stay loyal to your payments.
A lender will have to inform credit reference agencies of your timely payments to see the impact of boosted credit rating on your credit report. Other small loans like payday loans and Provident loans do not contribute to improving your credit score as they are paid in a lump sum.
Emergency loans
You can use small loans for any purpose, including personal planned expenses, but emergency loans can only fund minor emergencies. As you need money to support the unforeseen expense that cannot wait for you to have arranged money, these loans will be approved immediately despite a bad credit rating.
The repayment term of these loans is not more than a month, and the amount is also minimal. A lender may turn down your application if you cannot afford to repay the debt. Emergency loans should be taken out only when you cannot put off an expense. If you can postpone it, you should avoid these loans.
To sum up
There are some loans that you can get approved for quickly despite a bad credit rating, but at the same time, it is crucial to note that only the lender will sign off on your application if you can repay the debt.
Though you can qualify for short-term loans despite a bad credit score, remember that the interest rates will be high. It should improve your credit score. This will help you get a loan at affordable interest rates. At the same time, you should focus on your income as well.
