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Representative 305.9% APR. Representative Example: Loan Amount - £400 | Borrowed for 90 days.
Total amount repayable is £561.92 in 3 monthly installments of £187.31.
Interest charged is £161.92, interest rate 161.9% pa (variable)

Private Loans from Bad Credit Lenders

Trying to borrow money when you have bad credit is often difficult and frustrating. It isn’t only more difficult to secure a loan; if you have been fortunate enough to qualify for one, you will often find yourself paying far higher interest rates and/or origination fees.

While many individuals are aware of the term ‘private loans,’ not everyone knows exactly what they entail. However, private loans will normally refer to one of two situations:

  • Loans that are provided by any entity except traditional banks or credit unions
  • Student loans that have not been provided by the Department of Education

These two options will both be discussed in detail, so that you can make the most appropriate choice for your financial situation.

private loans from direct lenders

Who will Qualify for Private or Payday Loans?

In order to qualify for these types of loans, you may be required to meet predetermined credit history criteria. However, there are a number of private lenders such as Creditum that may not have as stringent criteria to meet. This means that you could stand a higher chance of receiving approval from them if regular lending institutions have turned you down.

Sourcing the Right Lenders

Nowadays, there are many options available when it comes to borrowing money. However, regular banks will often exercise extreme caution where individuals with bad credit histories are concerned. This means that you may find yourself turning to other sources to obtain the funds you need in a hurry.

If you’re unfortunate enough to have a bad credit history, it can be risky to search for lenders that will assist you. While it may be necessary to move from working with traditional lenders to those who offer their services online, you will need to take the right precautions – especially owing to the fact that your identity could be stolen online.

In addition to potential identity theft, lenders who state that they’re willing to work with individuals that have bad credit histories will often be more expensive, especially with regards to repayment terms and interest rates.

The most important thing to do is ensure that you are working with an industry-accredited lender before any type of paperwork is signed or you accept any funds.

Key points

  • A private loan is characterised as a loan that hasn’t derived from a bank or credit union.
  • If you have bad credit of have been refused a mainstream loan they could be an option.
  • It’s even possible to get a private student loan outside of the DoE within the UK.

Smaller, Local Lenders may be able to Help

Although you may be at the point where you’d be willing to borrow funds from any entity except a bank, it can be a good idea to give smaller community banks or credit unions a chance. These smaller institutions will often be more willing to provide you with a loan if your credit history is not as good as it should be.

When dealing with these smaller businesses, you’ll be able to have a direct meeting to discuss the options that are available to you. Keep in mind that a personal loan from a community bank or credit union will virtually always be better than one provided by predatory or payday lenders.

Online Lending Options

Peer-to-peer lending has made it easier than ever for cash-strapped individuals to borrow money in a hurry – even if they have a credit history that isn’t acceptable to regular banks.

Individual lenders will often be more flexible to work with, and it’s quite easy to get matched up with one these days. Over time, several other types of online lenders have made it possible to borrow money from sources that aren’t bank-related. Interest rates for these loans are often extremely competitive as well, meaning that they can be quite affordable.
Borrowing Money from Friends or Family

In cases where close friends or family members have extra money, they may sometimes be willing to provide you with the loan you need. However, it’s crucial to ensure that a formal and official document is compiled that clearly outlines repayment terms and conditions.

It’s even possible for the individual who is lending you the money to provide a regular report to credit bureaus. Over time, regular repayments can help rebuild your credit history or even help you create one if none is available.

This option may not be suitable for everyone, so it’s essential to confirm that all parties are satisfied with the agreement before proceeding with it.

Loans for Individuals who Regularly Invest in Real Estate

If you invest in real estate regularly, chances are that you’ll need sizeable loans on a fairly consistent basis – and it can be tedious to have to reapply each time funds are needed.

There are some individuals and other organisations that specialise in providing repeated loans to those who often invest in real estate. Also called hard money loans, they are normally processed quickly and proof of income and assets will not normally be requested more than once.

Obtaining Student Loans

Many individuals cannot afford to cover the cost of further studies without obtaining some form of assistance, such as federal or private loans. Differences between these two options will be explained below.

Government Loans

These are mainly provided by the Department of Education, meaning that they are often one of the better options to apply for – especially where interest rates and repayment terms are concerned. This is why you should do everything possible to obtain these before considering any type of private loan sources. Another aspect to consider is that your credit history won’t be as important when applying for federal loans.

Private Student Loans

Some fields of study are quite costly, meaning that it may not always be possible to obtain all the funds needed to enrol in them when using federal loans. This means that the option of private loans may sometimes need to be considered as well.

It’s normally easier to obtain private student loans if your credit history is good, but most students don’t earn an income – making it difficult for them to prove that the loan will be repaid. In cases like these, a co-signer or guarantor may be required so you can obtain the funds needed to further your education.

While student loans may be among the easiest to obtain, they can in fact be some of the most difficult and costly to repay over time. As a result, you should only borrow exactly as much as is needed to cover the cost of your chosen study course.

qualifying for a private loan

Interest on Private Loans

When obtaining a private loan, keep in mind that a higher than average interest rate or APR will apply – sometimes, as much as 500% interest can be charged on these loans.

While higher interest rates will apply to these loans, they can prove to be a financial lifeline in case of emergency – especially for anyone with a bad credit history.

Some private loan providers may also charge application fees, but this is not a common practice anymore. Entities such as Creditum do not charge any form of application or loan initiation fees, making them one of the more competitive options available. In addition, their application process is fast, easy and convenient.

What is a Private Personal Loan?

In cases where you have no form of collateral or assets to put upfront, an unsecured private loan may be your only option for obtaining extra cash in a hurry.

In some cases, the lender may perform a credit check at the time of application, but this normally won’t affect your chances of obtaining a private personal loan though. Most providers of unsecured loans charge high interest rates to offset the risk of dealing with individuals that have a bad credit history, meaning that these can sometimes be difficult to repay. Examples of these loans can include payday, instant cash or even some student loans.