#short term loans bad credit
Short Term Loans Even If You Have Bad Credit
The availability of short term lending in the UK has been on an extraordinary journey over the last 10 years. From the post-credit crunch explosion in 2010 to the reduction in lenders in 2014 following the introduction of a much more rigorous set of regulations, introduced by the Financial Conduct Authority (FCA).
Short Term Loans, often called Payday Loans, were set up to allow people to access relatively small amounts of credit, quickly and easily and for a short period of time – usually up to a month or until your next payday. But post credit crunch, payday loans quickly found a large market being able to service the credit needs of the large (and growing) number of people with bad credit histories. Originally the model worked for because it offered quick, online access with limited credit checks (or none at all). Borrowers could rollover the debt to the following month if they couldn’t meet the repayment and the high interest rates and fees offset the losses for the lenders from those people who didn’t repay.
The new regulations over the last 12 months have tightened things up considerably and some short term lenders have dropped out of the market. However a healthy number still remain and the new rules arguably mean a better deal for customers – with restrictions on charges and the ability to roll debts up. The regulator has also insisted that;
- Payday lenders follow the affordability rules and can demonstrate that they’ve checked the customer can afford the loan they’ve applied for
- Payday Lenders will now be expected to check an applicant’s credit history before approving a loan.
However, that does not mean that payday loans will now longer be available to applicants with poor or impaired credit files. Each lender will draw up its own criteria of customer that they will lend to, based on a wide range of factors for example; number of CCJs, most recent CCJ, amount of credit, number of missed payments etc. Each lender’s criteria will be different so if one can’t help you, another may well be able to.
Of course the problem is understanding what each of the lender’s criteria are before you apply – otherwise you could end up applying to lots of lenders and receiving lots of declines before finding one that can help. That’s where using a broker can be helpful – a good broker will understand what each lender is looking for and will be able to explain this to you. Be aware though of brokers that do this solely online – many will simply send your details to every lender on their panel with the same result for you, i.e. lots of declines.
There are some scenarios of bad debt where no lender will be able to help – for example if you are a declared Bankrupt – and some that make it very unlikely that you would be offered a loan – for example if you were in an IVA or with a Debt Management Company. If any of these apply to you or you are worried about your debt levels then we would recommend you speak to Stepchange (http://www.stepchange.org/ ) – who are a debt charity, their number is 0800 138 1111 which is free from landlines and all major mobile networks.
For the rest of us it is still possible to access a short term loan, even with bad or impaired credit. Why not give one of our loan experts a call – we do not charge any upfront fees for our service.