September 4, 2021
WHAT ARE THE POSITIVE AND NEGATIVE SIDES OF VERY BAD CREDIT LOANS?
By : Ellie Brown
Loans have become the part of life. It is not due to excessive expenses of the individuals, but because of their falling financial strength. One can say that finances are incomplete without the loans.
Due to the growing demand for loans, the financial marketplace of the UK has opened its doors for almost everyone. Earlier, restrictions were there for those who were unemployed or carrying poor credit scores.
Nowadays, specialised loan deals are available like unemployed loans, bad credit loans and even no credit check loans. Still, the biggest surprise comes when a few direct lenders in the UK bring loans for those with very poor credit scores.
If you explore the loan marketplace, you will find deals on very bad credit loans from direct lenders. However, it can be seen that conventional lenders like banks still hesitate to offer loans to those with adverse credit records.
They are not ready to believe in their repayment capacity. On the other hand, direct lenders have shown interest in their financial chances. They are bringing loan offers for them and guiding them in improving their financial records.
What are Very Bad Credit Loans?
In the recent trends of the UK loan market, we can see there have been a series of specialised loan offers. Very bad credit loans are indeed among them.
These are the dedicated loans for those with very poor credit ratings. These people include those having County Court Judgement (CCJ) against their name or having bank default. Individuals with bankruptcy but not because of their own errors are also included in this list.
Lenders, which providing these loans, tend to consider the current financial performance rather than the past credit. Suppose the individuals with adverse credit loans are paying all bills on time and showing improvement in overall finances. In that case, direct loan providers do not have any objection to assigning the loans.
Nevertheless, there are some restrictions too. For instance, these are very small loans beneficial during financial emergencies only.
In the remaining part of the blog, we will discuss how these loans are beneficial and risky for individuals.
Positive Sides of Very Bad Credit Loans
Loans are the valid means of financial assistance that one can get during difficult times. Very bad credit loans are also valuable for many situations. Let us know which the positive sides of these funding sources are.
You are still not bad even with a very bad credit score
The first thing that these loans ensure for the concerned individuals is that they are not bad despite adverse credit ratings. They have made mistakes in the past, or some circumstances, which they could not handle.
As mentioned above, when the lender agrees to offer you loans with a dismal credit record, it prefers your recent financial performance. Furthermore, if you are good at your current performance, then who knows, you might get the same benefits as high acceptance payday loans bring for the people.
Therefore, it is mandatory to keep your recent performance high and get the loan approval.
Chance to Remove Dent against Your Name
One thing is for sure that issues like CCJs, bankruptcies and loan defaults are like the dent against your name. These have the direct impact on your financial profile, and no one believes in your trustworthiness.
By applying for very poor credit loans from direct lenders, you have the chance to enhance your financial record. It may be like indulging in another debt, but you get the opportunity to prove yourself again.
Apply for the loans and pay the monthly instalments on time throughout the loan life. You will see the significant difference it can bring to your financial profile.
Negative Sides of Very Bad Credit Loans
There is no doubt that positives are there of these loans. There is another reality that some risks are also involved with very bad credit loans.
If you are going to approach a lender for these loans, you should be familiar with their negative aspects. Let us start.
High-interest rate loans
You are applying for these loans with lesser financial credibility. Since these are short-term loans, there is absolutely no need for a guarantor or collateral to secure the loan amount.
Despite these odds, the lender is still providing you with the loans. Therefore, it has every right to put the interest rates on the higher side. As the borrower, you have to agree on this before applying.
It becomes more problematic if you cannot find a responsible lender who can provide affordable loans.
Missing repayment means a full-stop to your financial opportunities
You are going to apply for another loan with not so good history of making loan repayments. It is another debt, and it is another burden. If you now have a stable income, you can manage the monthly instalments peacefully. In addition, it will have an incredible impact on your credit record.
Suppose you lose the job in between, and now managing the loan repayment becomes difficult again. Later, you miss one or two repayments, which will be the most significant risk involved with this loan.
You know that very bad credit is the lowest category. If you do not pay the loan repayments now, you will have no chance of getting financial assistance again.
A Comparative Conclusion
You do not have enough chances if you have an extremely poor credit record. Whatever the chance you get with very bad credit loans, you should grab it with both hands.
Managing personal finances is not easy. The recent time of pandemic has brought several lessons for the individuals. Keeping the financial record on track will generate opportunities. Otherwise, struggles are there, and you will be in lots of trouble.
Loans are there in the marketplace, but you must have the skills to use them for your financial prosperity properly.