Poor credit loan options for UK residents

Credit history is the benchmark which sets the limits for the loan. It may be easy and even alluring to fall into trap of the credit history where one can end up with no loans from the banks. There are high chances that a person is rejected to get loans from the mortgages as well. In recent years it has become increasingly difficult to borrow money. Even if you have a good credit history it can still be difficult to obtain a loan from a bank as a person has to go through the trouble of documentation and long waiting time as well. Many banks are disinclined to lend to people with bad, little or no credit because they consider them to more of a risk to lend money to. So if you do have bad credit or have been refused a loan elsewhere for any number of reasons you cannot get the loan so easily. People with poor credit history suffer in terms of loan processing, high interest rates and the guarantor as well. In that case there are various options available to the UK residents and one of them is highly acceptable logbook loan.

There are various options available for the people of UK with the bad credit history. The range of such loans can accommodate people with some form of impaired credit rating. There’s no single “bad credit loan”. Typically these loans have higher costs or need some form of security or guarantor. Some of them are related to personal loan, guarantor loan, car loan and many others. Some of them are secured and some are unsecured and in both cases; the purpose of the credit is fulfilled.

Guarantor Loan: Guarantor Loans are normally the larger/longer term loans and that are unsecured form of the loans. A person has to pay around over 1 to 7 years and one has to shown the grantor as a security and an agreement binds that person to pay the amount in case of failure from the borrower.

Personal Loans: Such kind of loans is almost same as of guarantor loan; yet they have o be paid between 1 to 5 years period time. In that case a person has to show some credit history score as well.

Car Finance: Car finance is a kind of loan; in which a bank pays a certain amount of money as upfront amount against the worth of the vehicle. In that case car is not under the possession of the owner until the entire amount is being paid by the user and yet h/she has to pay monthly/quarterly installments to bank.

Logbook loans: the widely accepted loans which are against the owned vehicle of the customer are known as logbook loan. Such kind of loan can be used against the vehicle which is already in the use of a person and there are no strings of finances attached to that loan. There are number of lenders that can credit the amount as per the value of the car. Hence amongst all logbook loan is the preferred one amongst the residents of the UK. Visit LogbookCalculator.com for more details.

The Way to Control Bad Credit Rating

bad-credit-loans-In the financial world, loans may be regarded as either a good purpose loan or a loan, which can be avoided. A good purpose loan is one, which is required to meet the basic needs of life including educational and shelter needs. Example of Bad debts are the loans that are required to buy things, which one can live without as well. These may include credit cards and other such loans which are very costly. A few significant points that are essential for evaluating your credit situation include the following:

  • Debt to Income Ratio:

This financial ratio is very important and is calculated when we divide one’s debt by one’s income. To get the figure for one month, these amounts should be on monthly basis. This ratio depicts the credit worth of the borrower and whether he or she has the capacity to furnish this loan. The financial calculations are given below:

Monthly Loan (this will include all payments like house mortgages, house rents, auto loans, equity loans for house, consumer loans, educational loans, credit cards and any other debts).

Monthly Income (Net earnings of the business or net salary, any regular bonus payments or overtimes on monthly basis, interest income or any other source of income in a month).  Be careful when including any earning that is not of a fixed nature such as overtime – your employer could reduce or eliminate overtime as a cost cutting measure and your calculations would be vastly overstated.

Debt to Income Ratio = Total Monthly Loan/Total Monthly Income.

Interpretation:

Once you have calculated the ratio you need to interpret it to find the credit worthiness of the borrower. Any ratio with a value of 36% or lower is considered to be a good credit ratio. While persons with a ratio of 30% or less have an excellent debt ratio. Any person with a ratio of 36% or more is more likely to default and hence have to pay high interest rates for any loan.  A ratio that exceeds 40% would most definitely mean you have a poor credit rating for loans. Different loans require different values of debt to income ratios. The ratio can be improved by reducing the amount of debt you have or increasing your overall monthly income.

Apart from the debt to income ratio, the lenders often look at the credit history or ranking of the potential borrower.  This value is calculated in a complicated financial and statistical manner and cannot be understood by a simple borrower.

It is essentially important for any person to keep a close watch on his or her financial position on a regular basis. It will help him or her assess his/her credit position and see if the loans that are outstanding against the person are satisfactory. This will help in keeping control of the person’s financial debt and avoid any bad or stressful situations. Even people with a bad credit history may be holding a loan for bad credit from http://www.creditpoor.co.uk and are likely to default on that, if the financial burden is too much. So keeping a close watch on your debt situation is vitally important for us all.

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