Beyond secured and unsecured loans, there are two types of loans: bad credit loans and good credit loans. Good credit loans are available to those who have a good credit rating or an impressive credit history. Those who have bad credit will not be eligible for these loans. They would have to go for bad credit loans.
What are Bad Credit Loans?
All loans have a certain credit requirement. Even bad credit loans do. The difference is in the points or credit ratings. Bad credit loans are lenient and do not require a very impressive credit history for the applicant to be approved.
Short term loans for bad credit are often the only recourse for those who do not have a great credit history. Certain standard loans such as business loans, home loans and car loans are not available to people with bad credits. In other words, these loans are not categorised as bad credit loans. Bad credit loans are usually personal short term loans and they are not offered by banks or traditional financial institutions. Traditional lenders and banks always deal with profiles or applicants that have a good credit history. Lenders like Cash Kitty offer short term loans in UK.
Bad credit loans can be secured or unsecured. There are some bad credit loans that are unsecured. For instance, payday loans do not require a credit check and do not need any security whatsoever. It is the pay check that matters and affordability of the borrower. Personal loans from companies and cooperative societies can at times be bad credit loans if they don’t assess the credit history of the applicant.
Pros and Cons of Short Term Loans for Bad Credit
You will obviously compare loans in UK. You would observe that bad credit loans are easy to apply. Most people would be eligible for bad credit loans however there would be other requisites depending on the type of loan one wants or the amount of money one applies for.
The demerits of short term loans for bad credit are higher interest rates, shorter repayment periods and smaller loan amounts.