Where to Borrow Money with Bad Credit

Borrowing Money is Possible with Missed or Late Payments

May 4, 2009

Borrowing money is more difficult when a consumer has missed or made late payments on a credit agreement. Find out where to borrow money with a bad credit rating.

Consumers that have missed or made late payments on a credit agreement will face a bad credit rating for the next 6 years. Adverse credit can even occur as a result of not paying a mobile phone or utility bill punctually. According to MoneyExpert.com, 6.25 million consumers had their application for credit rejected during the last 6 months alone.

Is it Possible to Borrow Money with Bad Credit?

The majority of consumers can still borrow money with missed or late payments, but knowing where to apply is paramount. High street banks are not a good starting point for bad credit customers, especially in the current financial climate. Possibilities for borrowing money include second mortgages, pawnbroker loans, a credit card cash advance, unsecured loans from doorstep lenders and Payday loans.

A Bad Credit Second Mortgage

Provided that a homeowner has sufficient equity available, a second mortgage is possible for a consumer with a bad credit rating. The rate of interest will be higher than on a primary mortgage, but there are specialist adverse credit lenders available. The provision of collateral means that this method of borrowing money is considerably cheaper than a Payday loan or credit card cash advance.

Borrowing Money from Doorstep Lenders

A doorstep lender, such as Provident Personal Credit, may be prepared to lend someone between £50 and £500. Lenders regularly offer the 'convenience' of collecting repayments at the door each month for those without access to a bad credit bank account. Loans are not secured, but interest payments will be a lot higher than on a second mortgage or credit card cash advance.

Credit Card Cash Advance

A number of consumers who have a bad credit rating fail to recognise that they are able to get a cash advance from an existing credit card. Providers allow customers to withdraw money from a cash point machine in the same way they would a debit card. According to Credit Action, borrowing money with a credit card cash advance incurs an average rate of interest of 29.92% APR.

Pawnbroker Loans

The current economic downturn has provided a real boost for the pawnbroking industry. Provided that a consumer has collateral (gold or electrical goods), a pawnbroker loan could provide a potential lifeline for those who are unable to borrow money due to missed and late payments. It is ideal for people with bad credit as, unlike second mortgages, no credit check is performed.

Payday Loans

Individuals that wish to borrow money until they are paid may find a Payday loan the ideal solution. This method of borrowing money doesn't require the provision of collateral, but repayments are very high. Bad credit customers will find that Payday loans are only viable for short periods as they accrue £20 of interest for every £100 borrowed each month.

A consumer who wishes to borrow money should decide whether they genuinely need a loan for an emergency situation. This decision is essential as borrowing money with bad credit because of missed or late payments attracts a higher APR. Whilst a second mortgage is the cheaper option, it also has more risk attached in the event of loan default.

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