By Micheal Reese
Average personal debt in the UK has risen above the £4,000 mark for the first time ever according to recent research from Datamonitor. In February 2005 figures were published which showed that debt on personal loans, credit cards, finance deals and overdrafts amounted to £4004 per UK adult by the end of 2004. Credit borrowing it seems is still at a very strong level, despite last year's interest rate rises and an uncertain housing market.
Borrowing on bad credit personal loans has contributed to this debt figure too. There has been a steady increase in the number of applicants applying for bad credit personal loans in the UK. CCJs, mortgage arrears and house repossessions are at an all time low, allowing borrowers to break free of the traditional chains that have prevented them from being accepted for personal loans on the back of a bad credit history. This has made bad credit personal loans more accessible to consumers, with loans companies more willing to extend credit to people with a bad credit history based on income-debt ratios and the ability of the applicant to handle debt responsibly.
Facts about bad credit personal loans
Bad credit personal loans are ideal for people who have found it difficult to secure personal loans in the past because of a bad credit record or for tenants. They are issued by specialist loans providers who lend money based on criteria other than your full credit history. If you have CCJs against your name, or if you have bad debts, mortgage arrears or have been declared bankrupt, then these specialist loans companies will be able to help you.
There are essentially two types of personal loans available for people with a bad credit history - secured bad credit loans and unsecured bad credit loans. Secured loans require collateral, such as equity in your home; unsecured loans do not officially require collateral, but it does help if you are a homeowner.
Bad credit loans will adopt a higher APR than standard personal loans. An APR that is 2% to 4% higher than the APR on standard personal loans is not unusual on a bad credit loan. The total amount available for borrowing will be less too, and minimum monthly payments are likely to be higher as well.
A bad credit personal loan is a good opportunity for people with bad credit to start repairing their credit record. Time is a healer in this respect, and the longer you can go without defaulting on your personal loans repayments, then the better your credit record will become. In fact, many providers of bad credit personal loans will switch you to a mainstream personal loans deal with more favourable rates if you can prove your ability to repay for the first two or three years of the loan term.
Looking for last minute shopping deals? Find them fast with Yahoo! Search.
Showing posts with label bad credit. Show all posts
Showing posts with label bad credit. Show all posts
Sunday, January 20, 2008
Personal Loans Bad Credit
By Matthew Bourne
Do you have bad credit problems but need a personal loan? If so, here's some good news - you're not excluded from taking out personal loans even if you have CCJs, mortgage arrears, defaulted loans payments and other bad credit issues to your name. All you have to do is follow this 5-step plan and be absolutely sure that you can meet the repayment demands on any new personal loans that you acquire.
Personal loans bad credit step #1 - your personal budget
The first thing people with a bad credit history must do in their quest to obtain personal loans is to draw up a personal budget plan. This is essentially a record of your income versus your household expenditure on a monthly basis and can be used to figure out how much money you will have left over with which to repay a personal loan.
To draw up a personal budget plan you'll need to factor in all of your household outgoings. This includes the mortgage / rent, all direct debits as well as annual costs such as the insurance and MOT on your car. Don't forget to include the gas & electricity bill, along with council tax, all insurance policies you are contributing to and your normal household bills like food & clothes shopping. If you have IVAs in place to pay off an existing bad debt then this should be included also.
When you've added up your expenditure give it a realistic feel by adding on 10% of the total as a contingency fund. Whatever you have left over can then be used as repayment for personal loans.
Personal loans bad credit step #2 - research the personal loans market
With your personal budget plan in place you can now research the personal loans market. Consider first the specialist loans companies who cater specifically for people with bad credit problems. By doing so you increase your chances of being accepted for a personal loan. It is also worth remembering that every loans application that is denied is noted on your credit file, contributing to your bad credit rating. So, it pays to pick and choose the lender instead of taking a scattergun approach.
Personal loans bad credit step #3 - be realistic
When making your loans application, be realistic in the amount you request to borrow from the lender. Interest rates on personal loans for people with bad credit are often higher than on standard loans terms. You may also only be eligible to borrow a certain amount from some specialist lenders. Check the lenders policies before making your loans application and use a personal loans calculator to be sure that the repayments on a loan are manageable.
Personal loans bad credit step #4 - don't lie
Lying on your loans application form will only make things worse for you when the lender finds out…and they will find out!
Personal loans bad credit step #5 - volunteer supporting evidence
Even if it is not requested do volunteer supporting evidence for your personal loans application. One of the best pieces of evidence to volunteer is your personal budget plan as not only will it give lenders an idea of what you can afford on your repayments, but it shows them that you're serious about finding a solution that suits both you and the lender despite your bad credit rating.
Looking for last minute shopping deals? Find them fast with Yahoo! Search.
Do you have bad credit problems but need a personal loan? If so, here's some good news - you're not excluded from taking out personal loans even if you have CCJs, mortgage arrears, defaulted loans payments and other bad credit issues to your name. All you have to do is follow this 5-step plan and be absolutely sure that you can meet the repayment demands on any new personal loans that you acquire.
Personal loans bad credit step #1 - your personal budget
The first thing people with a bad credit history must do in their quest to obtain personal loans is to draw up a personal budget plan. This is essentially a record of your income versus your household expenditure on a monthly basis and can be used to figure out how much money you will have left over with which to repay a personal loan.
To draw up a personal budget plan you'll need to factor in all of your household outgoings. This includes the mortgage / rent, all direct debits as well as annual costs such as the insurance and MOT on your car. Don't forget to include the gas & electricity bill, along with council tax, all insurance policies you are contributing to and your normal household bills like food & clothes shopping. If you have IVAs in place to pay off an existing bad debt then this should be included also.
When you've added up your expenditure give it a realistic feel by adding on 10% of the total as a contingency fund. Whatever you have left over can then be used as repayment for personal loans.
Personal loans bad credit step #2 - research the personal loans market
With your personal budget plan in place you can now research the personal loans market. Consider first the specialist loans companies who cater specifically for people with bad credit problems. By doing so you increase your chances of being accepted for a personal loan. It is also worth remembering that every loans application that is denied is noted on your credit file, contributing to your bad credit rating. So, it pays to pick and choose the lender instead of taking a scattergun approach.
Personal loans bad credit step #3 - be realistic
When making your loans application, be realistic in the amount you request to borrow from the lender. Interest rates on personal loans for people with bad credit are often higher than on standard loans terms. You may also only be eligible to borrow a certain amount from some specialist lenders. Check the lenders policies before making your loans application and use a personal loans calculator to be sure that the repayments on a loan are manageable.
Personal loans bad credit step #4 - don't lie
Lying on your loans application form will only make things worse for you when the lender finds out…and they will find out!
Personal loans bad credit step #5 - volunteer supporting evidence
Even if it is not requested do volunteer supporting evidence for your personal loans application. One of the best pieces of evidence to volunteer is your personal budget plan as not only will it give lenders an idea of what you can afford on your repayments, but it shows them that you're serious about finding a solution that suits both you and the lender despite your bad credit rating.
Looking for last minute shopping deals? Find them fast with Yahoo! Search.
Subscribe to:
Posts (Atom)