Finding a loan for a new car, or for some home improvement or even for basic home repairs is not as easy as it once was. Even banks that you have banked with for years and with whom you have a good financial relationship are not always willing to lend to you if you have a poor credit score. Sometimes people just make one financial mistake but that can affect their credit record for years to come in some cases; long after the issue has been resolved.
There are even some people who have never been in debt at all and never held a credit card but suffer the same problem because they have no credit history. It’s often only when you try to get a loan and are turned down that you realise there is something amiss on your credit record.
Most issues with a credit history can be resolved with time and patience but if you have an immediate need for cash and can’t get a loan through the more mainstream channels then what are your option? If you have been offered a new job but can only get there by car and don’t currently have a car, if you have a leaking roof and water is starting to penetrate and will soon start to create some serious damage where can you turn?
If you have parents or other family members who have a good credit history one solution is to look into guarantor loans for which the family member acts as a guarantor i.e. they agree to meet the repayments if you are unable to. This is usually only suitable if you know you can make the repayments yourself but just can’t get approved for a loan. A guarantor loan will mean that your family member’s credit record is checked and their credit history will be affected – not negatively but the loan will be recorded on their credit history.
There are also other types of loans for bad credit record holders which do not require a guarantor and these are usually available through a broker. You will have to pay a higher rate of interest for a loan such as this but if you have a secure job and if your income is high enough to cover the costs of repayments then they are an option if it is necessary to find the cash right now.
When you are assessing whether you can afford the repayments don’t forget to take into account all your current outgoings and any other loan repayments you may have.
Also consider alternatives that might mean you don’t need the cash – in the example of needing a car to get to a new place of work where no public transport is available, are there car sharing options or could you even get a taxi for the first few weeks? For a credit history that could be quickly improved it might be better and cheaper in the long run to take a taxi to work every day for a few weeks.