You might be surprised to hear this but, because of tough guidelines laid down by the Financial Conduct Authority, bad credit loan providers must follow some of the strictest rules if they want to stay in business. You might remember a few years ago that a handful of providers of bad credit loans got into a lot of trouble because of the very high-interest rates they charged to their customers and some of the fees they added to borrowers’ accounts if they missed a payment.
The good news is that those days have all gone now. Consumers of bad credit loans have never been better protected. And with the introduction of LoanTube to the UK, things are about to improve even further.
What are Bad Credit Loans?
In years gone by, you could only apply to banks and traditional financial institutions for loans. If you tried your bank for a loan, you’d need to hold all of your accounts with them and have kept those accounts in good standing for years and years. For other financial institutions, all they were interested in was lending large amounts of money to people whose credit records were spotless.
There was no such thing as bad credit loans until a few years ago. Bad credit loan providers launched here in the UK because they believed that millions of hard-working Brits were unfairly being prevented from taking out finance. Why? Because they might have missed a couple of credit card or mobile phone payments in the last six years.
Bad credit loan companies wanted to do three things:
- allow people access to the finance they needed
- let them borrow smaller amounts of money (£100 to £1,500, for example)
- give them the chance to pay it back quickly (within one month or twelve months)
Two types of bad credit loan companies dominated the market – no guarantor loan firms and guarantor loan firms.
Guarantor loan companies require you to nominate someone to pay off your bad credit loan if you can’t make the repayments yourself. That’s good for you but what happens if you hit hard times and so does your guarantor? Both of you would be chased for the money and end up with county court judgments.
Many bad credit loan borrowers did not feel comfortable, for understandable reasons, asking someone to vouch for them. So, in the end, most bad credit loan customers went to no guarantor loan firms instead.
What are Fast Loans (No Guarantor) Used for?
Bad credit loans are used by people for many different reasons. Usually, it’s when something unexpected comes along and it has to be paid for straight away like:
- an urgent bill
- funeral expenses
- car repairs
- vital home improvements (for example, your boiler has broken)
- medical treatment
- your employer runs into difficulties and can’t meet the wages
One aspect of bad credit loans sometimes called fast loans, which borrowers like is how quickly a lender can get the money to you – sometimes within minutes. Let’s say your washing machine broke down in the morning and you have three or four loads of washing you need to get through. The problem is that you don’t have the ready cash to pay a tradesman to fix it. With bad credit loans, you can get the cash transferred into your account within minutes. No waiting, No hassle.
Bad credit loans should only be used for emergencies, they should not be a part of your normal budgeting. You should not use a bad credit loan to meet repayments on other forms of credit. If you find debt is becoming difficult to manage, please contact the Money Advice Service without any delay.
Loans + Bad Credit + No Guarantor = What Protection Do I Have?
Bad credit loan providers, particularly those who lend money to customers over a short period, are regulated by the Financial Conduct Authority (FCA). The FCA lays down three strict criteria to bad credit loan companies if they wish to hold onto their FCA licence, including:
- the amount charged in interest can’t be any higher than 0.8% per day
- if you default, they can’t charge you more than £15 in fees and they can’t penalise you by upping the interest rate you pay,
- when all the interest and any fees are added up together, they can’t come to any more than the value of the loan in the first place
Are Bad Credit Loans (No Guarantor) Secured or Unsecured?
Bad credit loans with no guarantor are always unsecured.
When a no guarantor bad credit loan is unsecured, it means that you don’t have to put anything up that the lender can take away from you when you fail to repay. That makes it different to a mortgage, which, is a secured loan that uses your home as collateral.
How Long Do I Have to Pay Back Bad Credit Loans (No Guarantor)?
Generally, bad credit loans last for one month to twelve months.
The amount of money borrowers take out on bad credit loan is generally much lower than on a long-term loan. Because the loans are smaller it takes less time to pay them back and the monthly repayments you’ll make are for a manageable amount.
Loans for Bad Credit (No Guarantor, No Fees, Instant Decision) – the LoanTube Difference
Many borrowers want to work directly with a lender. If that’s you and you found us using search terms like…
- loans for bad credit (no guarantor, no fees, direct lender)
- very bad credit loans (no guarantor, no broker)
- loans (the UK, no credit check, no guarantor)
…it might be time to think whether going to a lender directly is the best option for you.
Why? Because going directly through a lender for a no guarantor bad credit loan is not always the best choice for two reasons:
- each lender has a “profile” that denotes the type of borrowers they would like to work with. The problem is that most lenders don’t publish their profiles so you may end up making an application to a firm that will not say “yes” to you
- if you make multiple applications directly to lenders whose profiles are different from yours, there’ll be a lot of credit checks against you. The more credit checks that are run against you, the less likely you are to be approved for a bad credit loan, even if you match a lender’s profile
When you submit your details to us, we’ll try to match your profile with the lenders to prepare the right deal for you. Every lender which says “yes” to you will send us the details of what they’re willing to lend to you and on what terms.
Once we have all of the lenders’ “yes” answers in, we’ll then get them to compete with each other to offer you the best rates and terms. Then, you choose the one you’re happy with. Although we can’t guarantee we’ll find you a lender, you really do have better chances of finding a suitable loan with us because we work with multiple lenders.
LoanTube Loans for Bad Credit (No Guarantor) – Start your Application
To start your application for a no guarantor bad credit loan, please click here. Remember that our service comes at no charge to you and that you don’t have to accept any of the quotes we provide you with.