There are numerous loan options available in the UK’s direct lending market. There are many opportunities for those individuals with excellent or good credit scores. Problems may occur for those who have poor or very poor credit scores.
However, this does not mean that the UK loan marketplace does not offer them anything. In this scenario, direct lenders are vital to mention. They have shown the courage to help people with lower credit profiles. Now, poor credit individuals have equal opportunities to avail of loans whenever they feel necessary.
Once you hear that plenty of loan options are available for a person with an adverse credit score, you may want to know some examples. There is no need to explain bad credit loans, as they are quite prevalent in the market.
Here, we want to focus on very bad credit loans with no guarantor from a direct lender. Yes, these are also dedicated to those with extremely poor credit. They may not be available in such numbers as bad credit loans, but they have proved beneficial for the last couple of years.
Therefore, we will discuss almost everything about these loans here. If you have found your credit score in that category, this blog will be crucial.
What are very bad credit loans?
Very bad credit loans or extremely bad credit loans are short-term loans provided by the direct lender to those with credit scores under the range of 0-560. This means your score is quite low, but you can still qualify for obtaining a loan.
These loans are for shorter durations because people with adverse credit scores lack financial credibility. Most lenders, even direct loan providers, are reluctant to offer long-term loans for bad credit individuals.
They feel risk in funding those people, so they offer only a small amount to borrow.
The loan amount limit ranges from £500 to £3000. It may vary according to the loan company you choose. Still, you will not get loans for larger amounts and longer durations.
The loan term generally starts at 3 months and can be extended to 12 months. Again, your lender will decide on the final term after analysing your current situation.
Why no guarantor is needed to avail of very bad credit loans?
Loans are available, but what about the relaxations? Are there any relaxations for people with very poor credit ratings? Yes, there is one available in the form of a no-guarantor clause.
Direct lenders show their flexible lending nature while providing these sorts of small loans. They do so by making the full-time income mandatory for the applicants. With a stable and full-time earning, you can easily make loan repayments, and that is why lenders do not feel the need for a guarantor.
However, it makes loans expensive, with higher interest rates compared to standard loans. This may hesitate a few people, but loans are still useful, especially during financial emergencies.
Who can qualify for these loans for very bad credit?
Generally, these loans are available for everyone with a poor record of maintaining credit scores. Still, these loans are largely beneficial for:
>Individuals with very poor credit scores
>Students with bad credit records
>Unemployed people but with sufficient part-time earning
>People with County Court Judgement (CCJ)
>Those with bankruptcy charges in the past (but not in the last two years)
>First-time borrowers or those with no credit history
If you do not find yourself among this small list, then you can ask your lender about whether you can apply or not. Apart from this, you have to fulfil these eligibility criteria:
>You must have attained the age of minimum 18 years;
>Having permanent UK citizenship is must;
>You should carry an active bank account;
>Your full-time monthly income should be a minimum of £800.
It can be assumed that you can quickly fulfil these qualifying prerequisites. Once you do that, you can start applying for these short-term personal loans.
How do you submit the application for very bad credit loans?
Once you qualify for these loans, you are free to apply for these loans. One thing is for sure: Direct lenders provide these small loans online. It indicates an immense comfort for you, as you do not have to travel anywhere to apply. Instead, you can apply by sitting at your home, office, coffee shop, or any other comfortable place. You can also use your smartphone to submit your loan application.
>Come online and start finding the lender
>Compare different lenders and their interest rates
>Once finalised, visit the lender’s website and complete an online form given
>Submit the form and wait for approval
>Lenders usually approve your application in a day
>Get the same day funding as well
During the process, lender does check your income proofs especially the salary slips. Moreover, there will be a soft credit check, but it will not be shown in your credit report.
What are the positives and negatives of very bad credit loans with no guarantor?
The time has come to analyse the pros and cons of very bad credit loans with no guarantor from a direct lender’s point of view.
Pros:
>You can get instant funding during the financial urgency;
>Chance of guaranteed approval is where you get a small but affordable amount;
>With proper repayments, you can improve your credit ratings to fair or good.
Cons:
>Interest rates will be higher;
>You cannot get the loans for larger amounts or longer duration;
>Missing repayment will destroy your credit record as no guarantor is needed.
In a nutshell, very bad credit loans can only be an effective financial source if no other option is available. This means you should apply when you lack any other alternative, and this must be your last option. However, you should not make a habit of applying for loans again and again.
With no guarantor, the direct lender is there to help. It is all up to you to use that help correctly.
Anna Johnson has more than 11 years of experience in direct lending industry of the UK. She is the Senior Content Editor at 24cashflow where she is leading a large team of loan experts. During her career, she has helped the loan aspirants to use the particular loans in the best way and improve their financial lives and status.
Anna Johnson is known for her in-depth research of the UK loan marketplace, as she has worked with many major lending firms in her career. During her educational phase, she has done a research on ‘Finance Fundamentals for Growing Business’.
