Bad Credit Loans Can Still Be Found

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Despite the fact that the UK loans industry has been devastated by the affects of the credit crunch, with a great many lenders having gone out of business. People with bad credit can still get access to the loans and finance that they need. What has happened though is the industry has had to reinvent itself in order to survive. Whereas pre credit crunch with the property market booming being a homeowner was all that was required to almost guarantee that you would qualify for a loan, no matter what your credit history. The lenders adopted the philosophy that as time went on because the value of your home was rising their security for the loan was relatively safe. However  now that is not the case for the lenders as the property market has become very unstable they are not as comfortable using the same model to underwrite the loans that they are offering.

Instead they have had to look at other means of ensuring that they get their money back, and in the main they have chosen one of two different options;

Guarantor Loans

A guarantor loans is a loan that is guaranteed to be repaid by a guarantor should the applicant fail to meet with the repayments. This model works well for the lenders for two reasons, firstly the applicant is more likely to keep up with the repayments because they are aware that their guarantor will be responsible for them if they do not, and secondly if the applicant does not meet the repayments then the guarantor is legally obliged to do so. This type of loan is appealing to anybody whose credit record is not the best that has no assets that a loan can be secured against, not only does it give them access to the cash they need but it can also start to improve their credit score, so long as they keep up with the repayments. Also because the loan is underwritten based on the guarantors details the applicant is not required to undergo a credit search, so it really does not matter how bad the applicants credit record is.

Logbook Loans

A logbook loans is a loan that is secured on your car logbook, as such should you default on the repayments the lender will sell your car to recover their money. This again makes the loan a pretty safe bet as far as the lender is concerned becasue no matter what happens their money is safe. To qualify you will need to own your own car that has no outstanding finance on it and you must be prepared to sign your V5 document (logbook) over to the lender. Once you have repaid the loan in full the lender will return your logbook to you.

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