If you have a bad credit history , you may find it difficult to find an unsecured loan at an affordable rate. Whatever the reason for your bad credit, loan lenders may view you as a high-risk sub-prime candidate, which means that they cannot be sure that you will repay the loan in full. In order to alleviate this risk, any loan offered may be at greatly increased interest rates, making the total loan cost balloon out of your budget.
One way to lessen the risk you present to lenders as a potential loan candidate is to apply for a secured loan. By offering collateral (such as your house) for a secured loan, the risk on the behalf of the lender is lowered, as they have the right to force the sale of your home in the event that your fail to complete on repayments. Secured loans can therefore be a much more affordable borrowing option if you have a bad credit rating, allowing you to borrow at a more attractive rate and have more options regarding loan terms.
While secured loans offer solutions for bad credit applicants to keep their total loan cost as low as possible, secured loans should be used very carefully, especially when being used for debt consolidation purposes. Often you may have made some poorly informed financial decisions in the past that has led to your current bad credit problems. If you have high amounts of unsecured debts such as credit cards and overdrafts, rolling these debts into one secured loan make financial sense, but only if your main priority is to clear the debts. Secured loans should not be used as a way to keep spending on your newly-cleared credit cards, because if you renege on a secured loan, the lender may repossess your home in order to settle the debts. If you have a bad credit history, always seek independent financial advice before taking on a secured loan to ensure that you will be able to afford your repayments.
To speak to a secured loan expert, complete the form on this page. TotallyMoney will show you the best rates available for your secured loan requirements, and put you in contact with an independent expert for free, no-obligation advice and a parallel quote, to give you the best chance of finding a bad credit loan option to suit your budget and requirements.