You may have heard of bad credit loans, but you may not know whether it is worth trying them out for yourself. iT is therefore good to have a better understanding of what they are and how they work and then you can judge for yourself as to whether they will suit your need.
History of the Loans
Bad credit loans came about because people noticed that those with a poor credit report did not really have the opportunity to borrow money. They tended to be declined for most loans that they wanted and therefore they could get stuck when they had an emergency and desperately needed money. This is when payday loans came along and they would allow people to borrow a small sum of money until they next get paid. Then it was noticed that repaying in a lump sum was tricky for some people and so instalment loans came along where payments are spread over a few months. Then it was seen that some people wanted to borrow larger amounts and guarantor loan cam about where larger sums were borrowed but a nominated guarantor would cover any missed payments.
How they Work
With a loan normally, the lender will look at your credit report and decide whether they feel you can be trusted to repay a loan. They will look at whether you have repaid loans in the past or whether you make regular payments for things such as utilities and they will see that as an indication that you are capable of repaying a loan. However, if you have had money troubles by missing payments or have borrowed a lot or have no evidence that you can pay for things then it is likely that they will turn you down. However, loans for bad credit are designed to help people in this situation. They do not look at your credit record in this way but build up trust by normally lending you just a small amount of money to start with. If you repay this on time, they will then lend you more next time. This means that if it is your only borrowing solution, then it could be useful but you could find that you will only be able to borrow a few hundred pounds.
Who Are They For?
The loans are designed for people who need money quickly for emergencies and cannot borrow elsewhere because of their credit record. For this reason, they are very quick to arrange and it can take just a few hours until you get the money. As they are so quick, they are sometimes used by people who do have a good credit record but just cannot find a loan that is quicker when they need money in an emergency. However, because they only provide small amounts of money, they are often used by those that only need a small amount.
Are they Worth Trying?
Whether they are worth trying depends really on whether they meet your borrowing needs. With all borrowing you should think hard about whether you really need to borrow and whether you are happy with the cost. Also think about the repayments and whether you will be able to afford them and this should help you to decide whether a loan is a good idea. You then need to think about whether this type of loan is the best by comparing all the loans available and thinking about which one comes closest to what you want. It can help to write down a list of your requirements so that you can match the loans to your list.