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Private Loans – Getting a Loan with Bad Credit

Borrow £250 to £3,000 by

Short Term Private Loans

£250 – £3,000


N Online decision
N Responsible lenders
N Rates from 278% to 1576% APR*
N 3-12 month repayment

Long Term Private Loans

£1,050 – £3,000


N Whole of Market panel
N Trusted panel of lenders
N Rates from 5.7% to 278% APR*
N 3-36 month repayment

Representative example: £500 borrowed for 5 months. Total amount repayable is £991.85 in 5 monthly instalments of £198.37. Interest charged is £491.85, interest rate 238.1% pa (variable). Representative 481.6% APR.

Key Features

  • These are typically loans that come from alternate sources than banks or credit unions.
  • They can also refer to student loans that aren’t sourced via the Department of Education.
  • They can be a convenient way to lend for those with a bad credit score that have been refused elsewhere.

So, you’ve had some money trouble in the past? Perhaps you didn’t pay a loan back on time. Or due to circumstances beyond your control your debt was passed to a debt collection agency and now there’s a black mark against your name? You know this will go in time, but the problem is you need a new loan right now and nobody is willing to lend.

Your bank declines your request and your credit card refuse to extend your line of credit. You don’t need the money for anything frivolous, in fact you need it urgently for something serious. Perhaps your car needs a part or something in your home needs replacing. To make matters worse, every time your bank or credit card company does a credit check it and you get declined, this shows up on your credit file, making things worse!


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What are private loans? The options:

There is good news, for starters you’re not alone. Millions of people are in this exact situation and there is help available. Today more and more private loan companies exist to help people in this exact situation. From Bad Credit Loans, Payday Loans, Credit Unions or even small local lenders can all potentially help. Each has a different set of rules compared to banks and credit card companies. While they all obey the same laws and are all regulated by the same financial conduct authorities, they tailor their products to suit those who need them.


Who qualifies for a private loan?

Nearly anyone can apply for a private loan, although which one you go for depends on what you need. Even those who have bad credit are welcome to apply for the below options, because each one falls into the category of non-traditional loans’.

Credit Unions

Which one you opt for is entirely down to you and your circumstances. You may have a local Credit Union who are happy to help, they tend to be a personable and conscientious team of people in our experience, wherever they are. Not many people know about them and their rates and payment options can be flexible when compared to banks and credit card companies.

Student Loans

Student loans are offered by two separate sources:

Government Student Loans

By student finance England, these are often applied for via UCAS when someone applies to attend university. But they can be applied for by going to SFE directly. If you’re studying either part time or full time, then see what you could be entitled to.

Private Student Loans

These are offered by private lenders but generally work the same way. The applicant will need to prove they are a student though. Remember the interest rates on these loans are extraordinarily low. So if you’re studying and are looking for a loan but have borrowed your limit from the government, then go to one of these before your bank or anywhere else.


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Online Lenders/Payday Loans

While controversial, payday loans are no longer what they used to be. The market has become more competitive over time and more and more companies have got involved in the business. This has made them adapt and put the customer first. While they still have high APRs when compared to other forms of borrowing, they can be very flexible and lenient to those who have bad credit.

They can also be obtained fairly quickly online without too much fuss. Another advantage is they allow the borrower to only take what they need. So instead of signing up to a loan of £1000 for 32 months when you only need a couple of hundred, you can instead borrow an amount like £200 and pay it back on your next payday. Hence the term payday loan’. But over time they have adapted to offer bigger loans for a longer term if the customer so desires.

Small Local Lenders

You may have small independent lenders in your local area who can offer you interesting loans. They may be more willing to listen to your story and sympathise with your situation. The advantage here is they supply a more local and personal touch. You also may be speaking directly with the business owner, meaning they will have the final say on if you’re approved.


Advantages to those with bad credit

One advantage of payday loans, Credit Unions and other forms of lenient borrowing is those with bad credit are likely to still get accepted. But that’s not all, simply being accepted then allows the borrower a positive mark to their name on their credit file. Other lenders will see that someone, somewhere has said yes to you and will instantly be more likely to say yes to you themselves.

So each time you’re approved for credit from any source your credit score will improve. Of course, it’s not going to fully heal overnight, but imagine if you took out a small payday loan every month and paid it back on time every time? Each of these will be reflected on your credit file and you’ll soon have built it back up. Of course, CCJs and defaults stick around longer, but not forever.

Not only does being accepted for a loan result in a positive point every time, but so does actually paying off the debt. Settling a debt and closing the account’ earns people with bad credit even more goodwill on their credit file. This can be paying off a credit card or even paying back a small payday loan. Of course, closing bigger accounts has a bigger impact, but the simple act of paying back a payday loan will help those with bad credit soon get back into the green. The same can be said for paying back loans from Credit Unions or other small personal loans.


Using Online Brokers to Find a Lender

We would always recommend getting an online loan through a broker. Especially if you’re applying for a payday loan. They will usually allow the borrower to perform a soft credit check’ which tests their eligibility without the need for a hard credit check. If the soft check comes back negative, then the borrower knows not to proceed. They have learnt they are not eligible without risking any further damage to their credit score.

If however they are eligible, then the broker will often scan the market to see what products (and indeed what lenders) suit them. Remember, online personal loan companies create lots of different loan products to suit different people. Not all of them will be appropriate but some might be. The broker will make sure that whatever products they suggest to you will be suitable and ideal. Not only that, they’ll make sure you have a high chance of success.

Selecting a Loan

Remember, whether you go through a broker, use a Credit Union or a payday loan, the final decision always rests with the lender. It’s ultimately up to them if they approve your loan or not. If you’ve been through a soft credit check and presuming all the information you provided was accurate and correct, you should be just fine. It’s also normal for the lender to ask to see proof of income or to clarify certain aspects of your application.

Usually the money is transferred to you shortly, often within 24 hours or the next business day. Depending on the lender. This is true of both Credit Unions and payday loans. But most importantly each will be able to aid you on your road to financial recovery.

Traditional lending is never the only option for people who suffer from bad credit.