Because of uncontrolled habit of spending the money, making timely payments on credit cards or unsecured loans become increasingly difficult. Consequently, people fall into debt-trap, and they carry high risks when applying for a new loan. Such people have little options than to search for especially carved out very bad credit loans. But these very loans may turn into a new debt once you have made mistakes in borrowing the money.
When you have made repeated mistakes on payments, such as late payment, defaults, arrears or you have more than one case of CCJs, and then you are a very bad credit borrower. Your FICO score may be way below than the acceptable level of 600.
Such people can be asked to provide any of their valued property like home or a vehicle as collateral. This way, the lenders feel secured in making the deal with the borrowers. However, your home will be repossessed once you default on the payment. The secured loan can be availed at lower interest rate. Greater amount of loan is accessible for 5 to 25 years of repayment. A larger duration may result in high interest payments.
These loans come in unsecured options as well for both tenants and homeowners. You can borrow up to £25000, depending on your repayment capability. The loan can be repaid in 5 to 15 years. However, these are costly loans; interest rate will be on higher side.
You can use the loan for home improvements, wedding, debt consolidation, holiday tour or you can use the loan as a tool of making improvements in your rating as you make timely repayments.
Before applying for very bad credit loans, apply for the rate quotes of the lenders. You may find a deal that has a lower rate of interest and fewer additional charges.
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