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If you find yourself in need of extra funds, there are numerous financial options available today that will help you get that money you are looking for even if you have bad credit. It is important, however, that you consider what your needs are first so you will know the kind of financial option that is best suited to your situation. If you require instant short-term financing for smaller amounts, for instance, you can opt for payday loans which are very easy to obtain. If your need for money is much bigger, however, long term loans are the more ideal solutions.
What is a Long Term Loan?
Let us first define what a longterm loan is before we head deeper into the discussion. First of all, long-term doesn’t necessarily indicate a specific time frame but instead refers to loan terms from one year to as many to 20 or even 30 years. When taking out a long term loan, it is important that you be specific about the length of time that works best for you and your financial situation. If you are comfortable on a loan that you can pay back for a year or two, then this is the one for you.
In the end, the length of the loan will depend entirely on the lender, its rates, and terms, the different amounts available, as well as other details of your eligibility such as income. If your eligibility is quite solid, your chances of landing the largest amount available for the longest term would be pretty high.
Long Terms Loans and What You Need to Know About Them
Aside from a length that can cover at least a year and as much as 20 to 30 years, there are other important things that you might need to know about long term loans. They will help you determine whether or not it is the type of financial option that is suited for you and your financial needs.
- Larger Amounts of Borrowing
Long term loans that are offered as secured loans are designed for financing high-cost needs like major house renovations or purchasing a new car. For this reason, lenders are comfortable on lending you tens of thousands of pounds against your property. If your financing needs are minimal like a £1,000, long term loans are probably not the ideal options for you. You’re better off looking for short-term loans like payday loans if your need for money is small.
- What you see is what you get
Lenders that offer long-term loans in the UK provide borrowers with what is called as the ‘representative’ interest rate. This simply means that the rate they are displaying is representative of what borrowers will be given. So if you see a lender advertising a specific interest rate on their website, it’s pretty much what you will get once you make your application.
- Easy to Payout
One of the best things about long-term loans is that they are normally given structured repayments. To simply put, once you avail for a long-term loan, you will end up paying the same amount every month until you have paid back the entire amount. This makes it easier for you to make a fixed budget for your payments.
- There are Penalties
Just like in any other loan, there are penalties for missed payments with a long-term loan. Be sure that you are aware of all the potential penalties that you might incur once you bridge the terms and agreements of the deal. But because the payments are fixed for every month, it’s really easy for you to make the proper payments as long as you stick to a budget.
- Your Credit Rating Doesn’t Matter
Perhaps the best thing about long-term loans is that it can be obtained even with poor credit. This does not automatically mean, however, that your credit rating holds no value. Your credit can affect the lender’s decision on how much he will let you borrow and its interest rate. The better your credit rating, the better the terms of the deal normally will be.
Long Term Loans For Bad Credit
As presented above, longterm loans are available to borrowers even if they have bad credit. If you are looking to take out long term Loans for bad credit, there are typically two types that you can avail for. First is the unsecured type of loan or a personal loan where you don’t need an asset or collateral to obtain it. Some of the advantages of this financial option include:
- Large amounts of borrowing of up to £25,000
- Ideal for most financial circumstances
- Loan terms from 2 years or 3 years
- Structured monthly payments
- Can be availed online with ease
You also need to meet certain criteria from lenders so you can take out the loan. To qualify for a personal loan from reputable lenders, you normally have to be:
- aged 18+ years
- A permanent UK resident
- A permanently paid employee
- Gross annual income that meets lender’s requirements
- Not bankrupt, under a current IVA or on a debt management arrangement
Longterm Loans Bad Credit no Guarantor
Another advantage of long term loans is that you don’t need to have a guarantor to back up your application. Normally for people with bad credit, banks and other traditional lending institutions would require a guarantor who will cover the payments once you miss or default on them. This negates the risk associated with your bad credit history.
Personal loans, for example, don’t require any form of a guarantor. There are also secured loans like logbook loans that allow you to borrow over a longer term for a larger amount, even if you have bad credit. With logbook loans, the money that you borrow is secured against your vehicle. This allows you to obtain the value in your vehicle without having to sell it. You can enjoy as much as 50% of your vehicle’s trade-in value and pay it back after several years. The lender will have possession of your vehicle until you have paid back the money that you owed in full.