If you've found yourself unable to get a loan from typical lenders
because of bad credit, you may still be able to get a secured loan from a
lender who specializes in making loans to those with bad credit.
Secured loan companies are often far more lenient in their requirements
than the High Street lenders because they are used to dealing with
higher risks in lending. In many cases, you may even be able to get a
bad credit secured loan with a rate of interest that is comparable to a
High Street personal loan. If you're considering a bad credit secured
loan, here are some of the points you should consider.
Do you know your credit score?
Your credit score is the single thing that most lenders will use to decide your rate of interest. The higher it is, the lower the interest rate you'll be offered. Even when you're applying for a bad credit secured loan - or perhaps especially when you're applying for a bad credit secured loan - knowing your credit score can be a big help. You may actually be surprised to find that your credit score isn't quite as bad as you thought. And the lower your credit score is, the easier it is to raise it with simple fixes like making a few on time payments.
Your credit score is the single thing that most lenders will use to decide your rate of interest. The higher it is, the lower the interest rate you'll be offered. Even when you're applying for a bad credit secured loan - or perhaps especially when you're applying for a bad credit secured loan - knowing your credit score can be a big help. You may actually be surprised to find that your credit score isn't quite as bad as you thought. And the lower your credit score is, the easier it is to raise it with simple fixes like making a few on time payments.
How much can you afford to pay back each month and how long do you want to be paying it?
As with any other loan, the monthly repayment on a bad credit loan will be determined by three things - how much you borrow, how long you borrow it for, and the rate of interest at which you borrow it. Once you know how much you need to borrow, the other two pieces of the puzzle are negotiable. You can often lower monthly payments on a high interest loan by taking longer to pay it back, but be aware that the tradeoff is paying more for the loan in the long run.
As with any other loan, the monthly repayment on a bad credit loan will be determined by three things - how much you borrow, how long you borrow it for, and the rate of interest at which you borrow it. Once you know how much you need to borrow, the other two pieces of the puzzle are negotiable. You can often lower monthly payments on a high interest loan by taking longer to pay it back, but be aware that the tradeoff is paying more for the loan in the long run.
Is there a hefty early retirement fee on the loan?
Many loans - especially loans that carry higher interest rates like bad credit secured loans - include an early retirement fee that you'll be obligated to pay if you pay off your loan early. That's to make sure that the credit company makes the money it expected to make off your loan. If you're hoping to refinance a bad credit secured loan with a lower interest loan when your credit allows you to get one, you'll want a loan with no early repayment fee, or one that is as small as possible.
Many loans - especially loans that carry higher interest rates like bad credit secured loans - include an early retirement fee that you'll be obligated to pay if you pay off your loan early. That's to make sure that the credit company makes the money it expected to make off your loan. If you're hoping to refinance a bad credit secured loan with a lower interest loan when your credit allows you to get one, you'll want a loan with no early repayment fee, or one that is as small as possible.
Rachael Gallant has worked for the UK financial services market
for a number of years specialising in secured loan applications for UK
home owners. She understands how time consuming it can be trying to
interpret the associated jargon which is why she writes clear, easy to
understand guides exclusively for "Secured Loans Centre".
