Unsecured Loans for Bad Credit Risks

Pawnbroker Loans, Doorstep Loans Payday Loans Some No Credit Check

Jul 25, 2009

An online search for bad debt loans or adverse credit loans will display a range of potential sources for this type of loan, which generally has a high rate of interest.

Unsecured loans for people with a bad credit score come in a number of forms. Payday loans without credit checks are short term, often thirty days or less, loans or cash advances. Although designed to be repaid when the borrower gets their next salary, many lenders allow the loan to rollover.

Payday Loans

Payday loans come with very high interest rates with some lenders charging over 2,000% APR. However lenders will argue that using APR as a method of measuring interest is unfair because payday loans were normally repaid within one month.

Payday loans are widely available online but lenders can often be found on many town and city high streets.

Doorstep Lending

Doorstep lenders, sometimes confused with loan sharks, have to be registered with the Office of Fair Trade (OFT) before they can do business.

Doorstep lenders, or home credit companies, are lenders who conduct their business in the borrower’s home rather than in an office. They concentrate on those people who may have a bad credit record and would find it difficult to borrow from more traditional sources.

Interests rates are high, an example from the independent loan comparison site Lenders Compared, showed a £1,000 loan repaid at £20 per week over 106 weeks. The total repayment was £2120, an APR of 133.6%.

To find a Doorstep lender is relative simple, a trawl of the Internet reveals many companies offering this service.

Pawnbrokers Loans Without Credit Check

Pawnbrokers are trying hard to cast off their rather grimy image and many now offer their customers a range of services, many of which do not require a credit check.

Their long-established system of pledging an item of value in return for a loan is still popular but some pawnbrokers now offer much more, including:

Many pawnbrokers have a professional on-line presence, which details their range of services.

There are a number of important points to consider when looking for an unsecured loan

Charging Order

It’s a common misconception that if a borrower defaults on an unsecured loan their home is not at risk of repossession. This is not necessarily the case; the availability of charging orders has changed that.

A charging order is a way of enforcing a previously unsecured debt by securing it against a debtor’s property. The charge will be the amount that is owed by the debtor.

Since 2000 there has been a 722% rise in the number of charging order applications by unsecured creditors (CAB 25/6/2009)

Early Loan Repayment

It’s always worth checking, when comparing loans, if it’s possible to repay the loan early and if so what charges are involved.

Charges For Late Payment

Some lending organisations, particularly at the ‘bad credit’ end of the market, will levy very heavy missed payment or late payment charges. The advice is to be aware of what they are before accepting a loan.

Sources:

A number of online sites were trawled to provide information on Doorstep Lenders and Payday Loans

The copyright of the article Unsecured Loans for Bad Credit Risks in Personal Loans is owned by Neil Gunn. Permission to republish Unsecured Loans for Bad Credit Risks in print or online must be granted by the author in writing.