“I feel like personal loans are no longer manageable as life can throw you a curveball. Around six months ago, I took out a personal loan. I made some of the repayments on time but now I am unable to as I have lost my job. It is very hard to make ends meet while I have been receiving repayment reminder messages. Since I do not have enough savings to repay the debt, I am thinking to apply for another loan. My credit score has plummeted. Is it possible to get funds without a guarantor but at affordable interest rates?”
Well, almost more than half of the population in the UK is living in debt for one reason and other. While several direct lenders are out there offering various types of short-term loans, it is convoluted to choose the deal that fits your budget. With a good credit score, you can get the deal at a lower interest rate. However, most of the lenders allow you to avail loans even if your credit score is less-than-perfect.
You can apply for loans without guarantor despite the bad credit history, but you are likely to pay high-interest rates compared to those who have an excellent credit rating. Since each lender charges different interest rates, make sure that your lender is offering these loans at lower interest rates than other lenders. Do online research so that you can grab the best deal.
If you are using these loans to pay off other short-term loans, make sure that you have enough funds to settle your debt. Create a budget to know how much money you are left with after making all your expenses. Many people seek a new loan to pay back the other, but the situation does not ameliorate much. As a result, borrowers continue to fall into debt.
Taking a new loan to repay the other loan is not a bad idea as long as you have repayment capacity. Consider the following factors if you are taking out loans for bad credit with no guarantor on benefits:
Consider if your lender allows you to pay more than the minimum payment
Before you choose any deal, talk to your lender if they allow you to repay more than the minimum payment every month. Even if you contribute a little extra amount, it will help you get rid of the debt faster. Make sure that your lender does not charge a prepayment penalty. Be clear with all these terms and conditions before signing the contract.
Keep your lender in the loop
If you are struggling to repay your debt, you should immediately contact your lender and tell about your genuine financial condition. The lender may help you choose another repayment plan that would fit your current financial condition. Keeping the lender in the loop will also help you avoid having damage to your credit score.
The bottom line
You can handle every debt if you have the repayment capacity. You should create a budget, estimate your credit need and borrow as per your repayment capacity. Make sure that you do not borrow beyond your affordability. If you have taken out a loan and another emergency pops up for which you do not have enough money, you can use your credit card. However, if you need a big amount of money, you should consider taking out a secured loan. These loans are short term or long term loans that you can secure against any property or asset. Collateral mitigates the risk of the lender and hence they will be ready to disburse the loan at lower interest rates. The lender can liquidate the asset to recover money if you make any default.