There are lots of different types of loans and it is a good idea to know about all of them so that you can use them if you need to. You will find that they can vary quite a lot as well and it means that you should spend some time thinking about the different types and making sure that you pick the one that is best for your needs. You will need to think about what your borrowing needs are at the time when you are looking for a loan and then match them up to the loan which best suits you. Therefore, if there are loans that you do not know about, then it can be wise to learn about them and then you will be able to decide whether they will be of use to you, when you need to borrow some money.
How do no Credit Loans Work?
It is required for lenders to do a credit check and so the name ‘no credit loans’ can be quite confusing. However, it means that they will not take the credit score into consideration when they assess someone for a loan. These types of loans came about because lenders realised that there were some people that were unable to borrow money because of their situation. They then set up these sorts of loans so that despite being in this situation, they would still be able to borrow money. They do require that the borrowers have an income though, this is because they need the ability to repay, but it does not have to necessarily come form a job, it could possibly be from benefits or pensions.
This means that these loans are available for most people to use. There are just a few requirements that you need to fit into in order to have these loans. You will need to be over the age of 18, be a UK resident with a UK bank account. Most people will fulfil this and should be able to take out one of these loans.
What Types are There?
There are a few different types and these are the main ones –
- Payday loan – you have to repay the full balance the next time you are paid and can borrow between £100 and £1,000
- Instalment loan – similar to a payday loan but you can spread the repayments over a longer time period so they are more expensive but easier to manage the repayments
- Guarantor loans – you can borrow between £1,000 and £10,000 and repay in instalments but need a guarantor who has a good credit record that is prepared to cover any repayments that you may not be able to pay.
Who are they for?
The loans are mainly aimed at people that have a poor credit record and cannot borrow elsewhere. However, they can often be arranged very quickly and can therefore also be suitable for people that need money in a hurry. It can often take quite a long time to arrange a loan, but some short term lenders will be able to organise them in a few hours, which means that they can be great for anyone with an emergency that needs money really quickly. Some lenders will also be available outside of normal banking hours. This can also be useful if you get a situation where you need to borrow money at this time and there are no other lenders available to help you. It is also worth just checking what they might be offering with regards to the cost of the loan as well as you may find that they are cheaper than an overdraft or other similar ways to borrow.