If you’re reading this, you probably require some fast cash. Maybe you found an amazing holiday deal and you need some extra money to book it before it’s too late. Maybe you want to make some home improvements seeing as we’re spending more time than ever at home! No matter the reason, if you’ve decided that a short-term loan is an affordable solution to your temporary financial shortfall, the ever-increasing lending options can overwhelm you. So let us help you understand your options. We look at a common question – can i get a peer to peer loan with bad credit?
What is peer-to-peer lending?
Peer to peer loans are a type of short-term unsecured loans in which you borrow money from another person. Someone that is willing to lend to you. To apply for this type of loan you need to join a peer-to-peer website or platform. The Financial Conduct Authority (FCA) regulates the companies managing these types of websites. They act as intermediaries between borrowers and lenders.
Can I get a peer to peer loan with bad credit?
In short, maybe. But it’s important to factor in a few things:
- If you apply, creditors will check your credit record using a credit reference agency. And you will have to pass the peer-to-peer company’s own checks as well
- It’s unlikely a major peer-to-peer lending site will accept you if you have bad credit
- They can offer lower interest rates than other lending sites, but generally you they entitle you to good deals if you have a good credit rating
- The interest rate you pay is likely to be directly proportional to your credit rating. The lower your score, the higher the interest you’ll pay
What’s a bad credit loan?
Bad credit loans is a phrase many use to describe a type of unsecured credit aimed at people with bad credit files. This is whether that is because of a poor credit history or a thin one. This type of loan would give people with a bad credit rating a chance to prove themselves and rebuild their credit score. you can do this little by little by making repayments in full and on time.
At cashasap.co.uk we have two types of short-term loans that offer you different repayment options depending on what your situation is:
Can I get a peer to peer loan with bad credit? – Multi Month Loans
Multi month loans are those types of loans that you repay in instalments. This means that you will likely pay more than if you repaid it in one lump sum, as you borrow the money for a longer period of time, but the repayments might be more affordable as they’re spread out over a number of months.
Payday Loans
A payday loan is a loan that you repay on a specific agreed date. This will usually be on your next payday but can be any date that is convenient to you.
Peer-to-Peer vs Bad Credit Loan
So, if you’ve decided that taking out a loan is affordable, which one suits you better?
Pros of peer-to-peer
- Can apply from anywhere as it’s an online service
- Peer to peer loans can be cheaper than banks or other online lending options if you have a good credit rating
- Some websites have a small minimum loan amount, which may be a good option if you need to borrow a small sum
- You could be able to borrow up to £35,000
Cons of peer-to-peer
- Can be more expensive than other online lending options if your credit score is low
- Some platforms charge you fees for arranging the loan, even if it doesn’t cover the full amount needed. This means that you might need to pay multiple fees if you have to apply more than once to reach the desired amount
- You might not be considered suitable by the leading peer-to-peer platforms if you have a low credit rating
Pros of bad credit loans
- You can apply from anywhere anytime as most of these loan providers are online based
- Most websites have a small minimum loan amount, which may be convenient if you need to borrow £100
- You might get accepted even if you have bad credit
- Your information is not usually shared with third parties
- If approved, the funds usually get transferred to you within two hours
- Everyone pays the same interest, whether your credit score is low or not
- If your circumstances change you may be able to agree a more affordable repayment option with your lender
Cons of bad credit loans
- Can be more expensive than banks or peer-to-peer platforms if you have a good credit score
- Some lenders will charge you late repayment fees
- The maximum amount you can borrow is normally up to £1,000
Can I get a peer to peer loan with bad credit? Conclusions.
So after considering all these facts, it’s clear to see that peer-to-peer loans are a good option if you have a good credit rating, as you could get big loans with better interest rates than those offered by banks. But that changes when you have a bad credit score, as you get charged a higher interest rate and it’s unlikely you will get accepted by one of the leading peer-to-peer platforms. If that is your case, you might want to opt for a bad credit loan, as these are specially tailored for people with lower credit ratings.
Caution
However, please bear in mind that taking out a loan needs to be an informed and responsible decision and you should only apply if you really need it and know that you can make your repayments in full and on time, as failing to meet your loan repayments can cause you serious money problems.
