Where to Apply for a Loan with Bad Credit

Pawnbroker Loans, Credit Union Loans, Payday Loans and Logbook Loans

Apr 29, 2009

Choosing to apply for a loan with bad credit is likely to end in disappointment. Find out how a pawnbroker loan, credit union loan, payday loan or logbook loan can help.

Bad credit is a huge obstacle for those who wish to apply for a loan. Missed and late payments are registered with all three major credit reference agencies; a search will quickly reveal the borrowers associated lending risk. However, there are specialist lenders that cater specifically for those with adverse credit.

Finding a suitable place to apply for a loan with a bad credit rating can present a challenge for any borrower. Mainstream lenders are not an option, except for homeowners seeking a secured loan. There are unsecured loans available, such as credit union loans, pawnbroker loans, payday loans and logbook loans. It is important to be aware that the rate of interest reflects the risk posed to the lender.

Credit Union Loans

Consumers that have a bad credit rating should either check online or consult their Citizens Advice Bureau (CAB) to see if there is a local credit union. Choosing to apply for a loan will involve a financial assessment; this is to ensure that a credit union loan doesn't further exacerbate money problems. The maximum a credit union charges members is £2 for every £100 borrowed each month.

Pawnbrokers Loans

Not everyone is able to apply for a loan from a credit union because they aren't always available. Pawnbroker loans are a viable alternative as they are easy to obtain. They don't require a credit check due to the provision of collateral which means that they are perfect for consumers with bad credit. The provision of collateral means that monthly repayments are lower than on payday loans or logbook loans.

Payday Loans

The payday loan is often the first port of call for bad credit customers that need to borrow money. This is largely because those who apply for a loan will not have to undergo a credit check and majority of applications are approved. The high rate of interest means that the term of the loan is normally only a month. Payday loans accrue interest at the rate of £20 a month for every £100 borrowed.

Logbook Loans

The repayments on a logbook loan are very similar to the Payday loan. The provision of a car as collateral means that a customer is usually able to borrow larger sums of money. Failure to keep up with the monthly repayments will lead to the car being sold to recover the money owed.

Consumers that are seeking to borrow money should apply for a loan from a credit union. Unlike a logbook loan or pawnbroker loan, no collateral is required. Furthermore, the lender is working purely for the interests of it's members. Payday loans can help with emergency situations, but it is very easy to fall into a cycle of dependency.

The copyright of the article Where to Apply for a Loan with Bad Credit in Personal Loans is owned by Asa Ghaffar. Permission to republish Where to Apply for a Loan with Bad Credit in print or online must be granted by the author in writing.