Hond Financial

Bad credit loans are those that are provided who have a poor or adverse credit rating. The poor credit rating is essentially due to a history of late payments on mortgages or other loans. Or even something small like an overdraft on a bank account could trigger an entry on the credit history file. As a result lenders are unlikely to lend money to people who have a poor credit history as they are deemed to be a much higher lending risk.

There are a select group of lenders who will still take a risk on some borrowers. Anyone can apply to these lenders as long as they fit some basic criteria such as being in full time employment and you are over 18 years old.
Because of the perceived risk these loans for bad credit lenders will be charging a much higher interest rate. Note that the interest rate from bad credit lendes could be 4-5% higher than a good credit lender. That’s a lot of extra interest to pay over the repayment period for the same loan size.

And a small number of what is known as sub-prime lender can offer loans if you are unable to get one from a bank or building society.
Because the interest rates are so high on these loans you should endeavour to improve your credit rating before applying for a loan. Also note that if you apply lots of times for a loan this can also show up on your credit file, which could scare some lenders.

In the event that you cannot make better your credit rating then make sure and search all the potential lenders as their interest rates can vary wildly. Do not be open to take the first loan offered. And even worse, do not be tempted to take out a loan that you will struggle each month to repay as this could make your credit rating even worse if you are unable to keep up with repayments.

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