What Loan Products Are Available Today

Ever since the introduction of the internet, the loan market has changed dramatically. The internet has meant the lenders are able to offer quick decisions and same day payouts, something that was simply not possible before. It has also meant the lenders are able to contact applicants and existing customers with ease via things like text, email and instant web-chat facilities.

Nowadays, there is a loan product available to suit almost any financial situation. Whether you’re looking for; £10,000 to buy a new car, £5,000 with bad credit or £200 to tide you over until your payday- there is a lender somewhere that should be able to help. Here are just some of the options available:

Secured Loans
Secured loan lenders will be able to offer anything from £2000 to £50,000 (with some offering up to £100,000) to homeowners. The reason secured loan lenders require the applicant to be a homeowner is because they will secure the loan against the borrower’s property. This means that if the borrower was unable to pay and the loan falls into default; the lender has the right to repossess or put a charge on the property.

Personal Loans
Sometimes referred to as unsecured loans; these loans work on the basis that the lender has not got the security of an asset such as a property to fall back on. This means that if the loan was to fall into default the lender is unable to repossess the property, although if taken to court they may be able to get a charge put on a property of the borrower is a homeowner. The regular personal loan provider will offer between £1,000 and £15,000 depending on the applicant’s credit history.

Peer-to-Peer Lending
Often referred to as social lending, this is a relatively modern approach to finance. It uses the idea of a borrower getting financed by investors who are funding all the lending. The investor then makes a margin depending on the interest rate the borrower is being charged. The “lender” in this situation is more like a middleman, taking a percentage of the interest charged.

Guarantor Loans
A guarantor loan is a personal (or unsecured) loan that is backed by a friend or family member with good credit. This means that in a lot of cases the main applicant of a guarantor loan can have a certain degree of poor credit and still be approved for the finance. This works because the lender has a “plan B” and if the applicant is unable to pay they have the right to ask the guarantor for the payment instead. The guarantor is legally obliged to make the payment if the applicant can’t.

Logbook Loans
Logbook loans are secured against a car. They work in a similar way to secured loans. The amount available to the borrower is relative to the value of the car the loan is being secured on. If the loan goes unpaid the lender will repossess the car.

Payday Loans
Payday loans are short term loans, usually lasting no longer than a month. The idea of them is to free up the money you need now and pay it back as soon as you receive your wages. An example of when you would take out a payday loan would be if you are struggling to pay an important bill mid-month, perhaps Council Tax, you know you could pay it after payday but they are demanding the payment now. In this situation you could borrow the required funds, say £100, and then 2 weeks later after being paid you would repay the £100 + £25 interest.

Personal Loans With Bad Credit: Instantly Approved Loans To Deal With Emergencies

Bad credit borrowers face some difficult challenges when it comes to seeking loans from traditional lenders for financial emergencies. Little wonder they should turn to online and alternative lenders to secure the necessary financing. The good news is that obtaining personal loans with bad credit is definitely possible.

The problem with traditional lenders, like banks and credit unions, is that they are extremely cautious when lending to applicants with low credit scores. And when there is an emergency, their approval process can be too slow to be of any good. In such circumstances, with little time to consider options, guaranteed loan approval is a must.

There are loans that can be approved within seconds, and delivered in just a few hours. These are called payday loans, and are often a lifesaver for borrowers. But there are details that need to be known before taking them on.

Advantages of Payday Loans

Opting for these loans provides several advantages over traditional loans. The first is that approval is almost guaranteed with these personal loans, with bad credit completely ignored by the lenders. So, even those with the worst credit scores can get funds.

The second advantage is that the approval system is extremely fast. While traditional lenders will boast 24-hour approval times, these loans are approved in seconds thanks to modern computer programs, with the funds then transferred directly into the bank account of the applicant as quickly as 2 hours after approval is granted.

The reason for such fast guaranteed loan approval is that the income of the applicant is the only basis of consideration. And the loan is given on the back of an upcoming paycheck, thus the reason it is called a payday loan.

Disadvantages of a Payday Loan

But this convenience and certainty is provided to every applicant at a cost. The interest rates charged on these loans are extremely high, with some lenders quoting rates of 30%. Getting personal loans with bad credit is great, but it is also extremely expensive.

What is more, the repayment period associated with these loans is very short, with the loan term sometimes just 14 days. A common term is 30 days, but this too means that the loan is effectively repaid in one go. And since it is taken out of one paycheck, little is left with which to cover normal monthly expenses.

The promise of guaranteed loan approval is still a major advantage, but in order to make the loan feasible, the loan sum limit is very low. These payday loans range in value from just $100 to $1,500, ensuring the specific emergency can be dealt with, but little else.

Secret to Managing Instant Loans

When time is of the essence, securing personal loans with bad credit quickly is not easy. So, when instant approval is offered, and bad credit ratings are completely ignored, it is an opportunity that is difficult to pass up. However, managing these loans requires real financial discipline.

For a start, the repayment of any loan in one go can create greater financial pressure. For example, a $1,500 at 30% requires a single payment of $1,950 to clear – and that is a very large sum to take from one paycheck. Despite the convenience of guaranteed loan approval, extremely strict fees and penalties exist so any failure to clear the loan on time is likely to worsen the situation dramatically.