Get a Loan Although You Have a Poor Credit Record

Missing payments on a loan can have dire consequences for poor credit ratings and make it very difficult to obtain credit in the future.

Take secured loans as an example. Failure to keep up the payments can lead to your house being repossessed. This is just one of the reasons that an unsecured personal loan is a better option than loans for people with bad credit.

Loan for low credit score people

Bad credit loans are those cash loans designed especially for people with a poor credit history. There are many reasons why you may have an unfavourable credit check such as having a court judgement against you or failing to keep up with repayments on other credit agreements.

And did you know that, even if you have no credit score loans in your history or have never had credit, you can land up with a poor credit rating and lenders won’t have any evidence that you will be able to manage your loan successfully.

While it’s usually impossible to borrow from lenders if you have a negative credit history, there are online loans available for those with poor records.

The Pros and Cons of Poor Credit Loans

One of the biggest advantages of a bad credit loan is that you can actually borrow money which you wouldn’t normally be able to do with a poor credit history. Of course this offers a significant financial lifeline to those who need a personal loan to cover a major expense or to consolidate loans.

Another big advantage is that personal loans can help people with poor credit ratings mend their credit status. This happens when you make the payments on time and demonstrate that you’re responsibly able to manage your money.

One of the main drawbacks to such loans, however, is that interest rates can be very high in relation to standard loans. Since applicants with poor credit ratings have usually had issues with managing their finances, they present as a much higher risk to lenders and the rates offered will be much higher than those for someone with a favourable credit score.

Bear This in Mind

Loans can be secured or unsecured. Unsecured loans mean that the lender won’t have a claim to your property if you can’t keep up with payments. Secured loans are secured against your property or other valuable assets.

If you apply for a secured loan, you might get a lower interest rate but your home will be at risk if you don’t keep up the repayments.

When deciding how to repay your loan – whether you use it for numerous expenses or debt consolidation, bear in mind that, if you want a longer repayment term, you’re going to end up paying far more interest than if you try to pay your loan off quickly.

Also, consider that interest rates on poor credit loans are tiered according to how much you borrow. Rates tend to be lower with the more you borrow so if you’re just in a lower tier, it can be worth borrowing slightly more to enjoy the lower rate. But never borrow more than you can afford to comfortably pay back.

Finding the Right Loan for Your Needs

There are different loans out there for people with poor credit ratings. Do your research before applying to a lender and let us help you find the best loan for your needs. Start by approaching Capitec — a major player in the South African unsecured lending market.

To get a loan, please complete and submit the form on this page

All info was correct at time of publishing