If your credit history is less than perfect, you may be under the assumption that borrowing money is out of the question. However, if your circumstances have improved and you're able to afford the repayments it is possible to get a secured loan, even if you have a poor credit history.
There are lots of different reasons your credit rating may not be ideal. Perhaps you missed repayments on a credit deal. Maybe you had a CCJ or arrears on a loan. Whatever has happened in the past doesn't need to impact on your future as there are many lenders who specialise in working with customers who have bad credit.
Been refused for an unsecured loan?
If you've been refused for an unsecured loan before, it doesn't mean that you'll get turned down for a secured loan. They are very different products and lenders tend to be more lenient than with unsecured credit.
This is because with a secured loan, the lender has the reassurance of having security. If you don't repay your secured loan, your property could be at risk. While this improves your chances of being accepted, the consequences of non-payment are serious. Therefore, it's essential to really be certain that you can afford the repayments before taking out a secured loan.
Lenders will need to check that the loan repayments are affordable, but having problems in the past won't mean that you're automatically refused.
Easing the financial burden
If you're currently struggling with unsecured debts and have high monthly repayments, a secured loan could provide the solution. By switching multiple debts from different lenders to a single secured loan, you could save a considerable amount per month.
This is known as debt consolidation and can be a useful way to bring monthly repayments down to a more manageable level. By meeting the repayment every month you will start to rebuild your fractured credit rating, so it's a solution that's helpful for both the short and long-term.
Secured loans can be taken out over a much longer period than unsecured debt so the overall amount of interest you'll be charged should be considered. Although the monthly payments will reduce, if the repayment term is a lot longer than on your original debt, you may end up paying more overall.
Of course, if you're only paying off the minimum from your store or credit cards every month, you'll be already paying a hefty amount of interest and barely making any dent on your balance. A consolidated secured loan allows you to steadily repay the balance without hiking up your monthly outgoings.
Taking back control
If you have bad credit it can often feel as if you've got no control over your finances, unable to borrow money when needed for large expenses. A secured loan can provide the solution, whether you're looking for an affordable way to finance home improvements or consolidate the debts that you currently have.
The lender will want some information about your circumstances, particularly whether the repayments will be affordable. This means they will ask you some questions about your income and outgoings, including about any loans you already have. They will use this to make a decision about whether they can offer a secured loan, and the interest rate that applies.
A secured loan can provide a way of escaping a spiralling credit trap by allowing debts to be repaid at an affordable rate. Secured loans are also ideal for large expenses such as home improvements or a car purchase, enabling you to avoid other types of credit which may be more expensive. Whatever your financial need, a secured loan allows you to regain control of your finances now and also steadily build an improved credit rating for the future.
To find out more about secured loans or to make an application, contact Loans Warehouse now on 01923 678 870 to find out more. All circumstances are considered, so even with a very poor credit rating, a loan may be more affordable than you think.