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Min-max loan: £10,000 - £500,000
Cost: £207.5 per month
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Representative APRC: 6.6%


Min-max loan: £7,500 - £350,000
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Representative APRC: 9.2%


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Term: 10 years
APR: 8.09%
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Representative APRC: 10.8%



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Short term loans for bad credit

We all know that financial emergencies can strike unexpectedly, potentially leaving you in a tight spot.  

For those with a less-than-perfect credit score, accessing the funds required to address any pressing needs can sometimes feel like an uphill battle.  

However, lenders know these situations exist, and there are products available to cater to these circumstances. 

In fact, the financial landscape has evolved to accommodate situations which require immediate attention, and short-term loans for bad credit have emerged as an option. 

In this article, we delve into the world of short-term loans for bad credit, shedding light on how they operate, the benefits they can offer you, and what to consider before you start the application process.  

What is a bad credit loan? 

A bad credit loan is specially designed for those who have an adverse credit history, a low credit score, or perhaps no credit history at all. 

It can allow you to access to funds when you need them, even if you’ve been declined for a loan recently. 

Bad credit loans in the UK are typically offered by specialist lenders who understand the needs of those with credit constraints and often focus solely on lending to people with imperfect credit. 

These loans can come in various forms, each carrying their own benefits and drawbacks.  

Some examples are payday loans, guarantor loans, or short-term instalment loans. 

These loans may come in an unsecured arrangement, which means they don’t require you to put up any collateral like a house or a car to secure the loan. 

The primary purpose of a bad credit loan is to offer financial assistance to those who may have faced difficulties surrounding credit in the past, such as a slew of missed payments, defaults, or even bankruptcy.  

It’s important to be aware that these loans can have higher interest rates. However, despite this, bad credit loans can offer you an opportunity to access funds and, if managed responsibly, could potentially help improve your creditworthiness over time. 

When assessing an application for a bad credit loan, lenders normally consider other factors in addition to credit history to find reasons they can lend to you, such as your income and how stable your employment is.  

These factors help lenders assess your capacity to repay the loan you take out.  

If you’re seeking a bad credit loan, it’s important to carefully evaluate the terms you’re offered, the interest rates, and all the various repayment options offered by different lenders to ensure you choose the most suitable option for your ongoing needs. 

What short term loans are available for bad credit? 

It can be true that there are less finance options available for borrowers with poor credit. But while the lending pool is diminished slightly, there are still several short-term loan options available.  

Payday Loans 

You’ve probably heard of payday loans. However, how do they really work? 

These loans are offered to you on a short-term basis. A full repayment is typically due on your next payday, hence the name.  

This type of loan is designed to cover small, immediate expenses before your next paycheck arrives.  

Payday lenders often consider factors such as your income and employment rather than credit history when determining whether you’re eligible for one of their products. 

Guarantor Loans  

Guarantor loans involve bringing in a trusted individual, like a family member or friend who has good credit, to co-sign on a loan you take out.  

The guarantor acts as a backup on your behalf. They promise the lender that they’ll repay the loan if you end up defaulting.  

In general, having a guarantor on hand can increase the chances of approval for a loan if you have bad credit. 

Instalment Loans 

The clue is in the name with this product, as instalment loans are repaid in equal monthly instalments over a set timeframe.  

There are instalment loans available that cater to borrowers with credit issues. Interest rates can be higher on these types of loan, but they can allow you to borrow larger amounts and repay them over an extended period. 

Depending on your circumstances, there are cases where repaying your loan in monthly instalments may be more manageable than paying it back in one go.  

But it’s important to consider your current and future needs when making this decision, as paying back monthly can result in higher interest, and a greater amount to repay in total over the course of your loan. 

If you're unsure which repayment method is best for you, speak to a finance advisor for help.   

Secured Loans 

Secured loans require an asset, such as a vehicle or property, as collateral.  

They typically have more favourable interest rates because using collateral reduces the level of risk on the lender’s side.   

However, while lower interest rates reduce the cost of your borrowing overall, whatever you put down as collateral is at risk.  

Defaults on a secured loan mean you will be at risk of losing the asset you use as collateral for the loan.   

Again, whether or not this type of loan is suitable for you can only be judged on a case-by-case basis. If you’ve had credit issues in the past but are now confident in your ability to repay the loan, a secured loan might save you money.   

However, you must be aware of the risks involved in terms of potentially losing your property or vehicle your loan is secured against. Always read the terms and conditions of your loan thoroughly and reach out to your loan provider or a financial advisor if you're unsure. 

What’s the bottom line? 

It's important to bear in mind that while these short-term loan options may be available to you even with bad credit, they often carry higher interest rates.  

Before taking the plunge, it can be beneficial to carefully assess the terms, repayment options, and other costs of each loan before making a final decision.  

Are longer term loans available for those with bad credit?

Yes, there are long-term loan options available for borrowers with bad credit. While having a poor credit history may limit some traditional borrowing avenues, certain specialised lenders cater specifically to individuals with poor credit scores.  

These lenders understand that credit scores may not fully reflect a borrower's current financial situation and are willing to consider other factors when assessing loan applications. 

Long-term loans for bad credit typically come with extended repayment periods, allowing borrowers to spread their repayments over several months or even years. These loans may be available for various purposes, such as debt consolidation, home improvements, or major purchases.  

But while there are options available, the terms may not be as favourable as for borrowers without credit issues.

Personal Instalment Loans 

Personal instalment loans are a common type of longer-term loan used by many people in the UK.  

They enable you to repay the loan you take out in fixed monthly instalments over a lengthy period, usually ranging from six months to several years depending on what you can afford.  

These loans might be available to you even if you’re shackled with bad credit, but they might come with higher interest rates and stricter eligibility criteria so tread with caution! 

Credit Union Loans 

Ever heard of a credit union? They’re often willing to offer longer term loans with more flexible lending criteria in comparison to traditional banks you’ll come across throughout your search.  

These institutions focus on the financial wellbeing of their members and may be more willing to work with you if you’ve got bad credit.  

Credit union loans can be an attractive option for any longer-term borrowing needs which may crop up. 

Online Lenders 

Even though they may not be as well-known as big banks, there are online lenders who specialise in providing longer term loans for people with bad credit.  

It's important to take time to thoroughly research and compare the terms, interest rates, and reputation of online lenders before you apply for a loan with them. 

How can I improve my credit score? 

Improving your credit score is a gradual process which can take some time. It requires consistent effort and conscientious financial management.  

So, what are some steps you could take to improve your credit score? 

Take stock of your credit report 

The best place to start with improving your credit score is to obtain a copy of your credit report from one or more credit reporting agencies. 

Equifax, Experian, and TransUnion are a good place to start. Once you’ve received the report, it can be beneficial to review it carefully.  

Checking for errors, such as incorrect accounts being listed or late payments you don’t recognise and disputing any inaccuracies you find could help improve any wrongful marks on your credit history.  

Credit bureaus can then remove any errors which you identify, meaning you’re not being unfairly penalised. 

As well as being able to troubleshoot errors, regularly monitoring your credit report helps you stay aware of your credit status in real time and identify areas in your financial behaviour which could be improved. 

Make timely payments  

Paying your bills on time, every time, is one of the most integral factors affecting your credit score over time. 

To keep on track every month, you could set up payment reminders or automatic payments to ensure you never miss any important due dates.  

Consistently making payments on time demonstrates your creditworthiness and can elevate your score in the future. 

Reduce debt and credit utilisation 

High levels of debt can negatively impact your credit score quite substantially.  

Work on reducing your debt by creating a budget, prioritising higher payments, and avoiding unnecessary expenses across the board. 

Another important action to take is to try and keep your credit utilisation ratio (the percentage of available credit you're currently using) below 30% if possible. 

Paying down any existing balances and avoiding maxing out your credit cards can help improve your score as it shows you can manage credit accounts conservatively. 

Build a positive credit history 

If you have limited credit history or a thin credit file, building positive credit is essential to improve your credit stature.  

You might consider opening a secured credit account or becoming an authorised user on someone else's credit card.  

This can help you start establishing a positive payment history which will make you a more attractive borrower to any lenders you approach.  

Making small purchases on the cards and pay off the balance in full each month can demonstrate responsible credit usage.  

Avoid opening multiple new accounts 

Having a diverse credit mix behind you can be beneficial to your score. 

However, it’s best to avoid opening multiple new accounts in a short period despite this fact.  

Each new application you make results in a hard inquiry appearing on your credit report. These inquiries can work to temporarily lower your score.  

Instead, focus on managing your existing accounts responsibly if you’re after some credit score growth. 

Keep old accounts open 

Closing old accounts you no longer use may negatively impact your credit score. This is because it reduces your overall credit history and available credit at any one time.  

Even if you have no use for an account you’ve opened in the past, consider keeping it active, especially if it has a great payment history. 


What is bad credit?

Bad credit refers to a low credit score or a negative credit history. 

This situation may have occurred due to late payments, a number of defaults, consistently high debt levels, or other instances of financial mismanagement.  

Having bad credit against your name indicates a higher risk level for lenders, making it more difficult for you to obtain loans or credit with favourable terms. 

What's a payday loan? 

A payday loan is a popular route to credit for many people. 

These are short-term, high-interest loans which typically need to be repaid by the time you get your next paycheck.  

These loans provide quick access to cash, but often come with significant fees and interest rates to boot, making them a last resort.  

Usually, payday loans are unsecured and might be best suited to those with limited credit options or financial difficulties. 

How long are short term loan terms? 

Short-term loan terms can vary depending on the lender you go for, your credit record, and the specific type of loan.  

Generally, short-term loans have a repayment period of a few weeks to a few months.  

The clue’s in the name – they’re designed to be repaid quickly, often within a year or less.  

If you’d prefer lower monthly payments, it could be suitable to go for a loan which carries a longer term. 

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