Secured Loans with Bad Credit

This is a loan that people take out which is ‘secured’ against an asset such as your home. As it is secured against an asset in the event that you are unable to pay the loan the asset could be repossessed. As the loan is ‘secured’ lenders are more willing to provide these to clients that have bad credit registered against them such as missed payments, default &/or county court judgements or if you have simply a low credit score.

Bad credit secured loans are taken out for many reasons such as:

• Home Improvements – Maybe you need to carry out home improvements such as new kitchen, bathroom and /or new window’s or on a larger scale perhaps you want to do a loft conversion or an extension.
• Debt Consolidation – If you are struggling to keep up with your current debts and have missed some payments, maybe a bad credit secured loan would be an option where you can consolidate your debt into one monthly payment with a lower interest rate.
• Buy a Car – May be you need a new car as the family is getting larger and your existing car is no longer suitable or reliable enough.
• Raise a Deposit – May be you want to buy a property with the intension to rent it out long term as an investment and you need to raise a deposit alongside a Buy to let mortgage or perhaps you wish to help out your children with a deposit so they can get on the property ladder.
• Pay Tax Bill – Maybe you have an outstanding tax liability which needs to be paid.
• Invest in your Business – May be you want to invest and expend your business by purchasing assets such as a new office or machinery.

Most secured loan lenders offer their loans through mortgage and loan brokers, such as The Money Hub, and approaching them directly is not an option. Your broker will discuss your needs, try and source a suitable lender based upon many factors such as affordability, equity you have within your property and the bad credit you have registered against you.

Unfortunately it is not possible to get an instant decision, however an experienced adviser can give you an idea of possible options fairly quickly. These are the steps that the bad credit secured loan adviser will go through:

1. Complete a Fact Find to assess your circumstances and needs.
2. Review your credit report paying close attention to any bad credit registered such as missed payments, defaults and county court judgements.
3. Source a lender and provide you with a quotation suited to your requirements.

At this point you should take your time, consider the quotation and other options you may have available. If you wish to proceed your adviser will outline the next steps to submit your application.

This can depend upon many factors such as:

• Bad Credit – What bad credit do you have registered against you, when was it registered, how much was the bad debt for? What type of credit did you miss the payment on? And have you managed to resolve this?
• Equity – If you have lots of equity within your property you will have more lenders possibly willing to help you and offering a lower rate when compared to a small amount of equity which would be more risky for the lender.

Interest rates on secured loans are higher when compared to main residential mortgages.

Here are some examples where secured loan lenders are more flexible when underwriting loans:

• More Accepting of Bad Credit – These lenders can help if you have had missed payments, defaults, county court judgements, payday loans, bankruptcy, Individual Voluntary Arrangements and debt management plans.
• Income – Many high street lenders require a minimum of 2 Years Business Accounts, however some secured loan lenders allow just 1 years accounts or can be more flexible where you have changed from Sole Trader to a Limited Company.

The main cause of a poor credit profile is due to missed payments which have taken place. When you miss a payment the lender will put a mark against your credit report. The more missed payments you have again more marks will be registered on your credit report. Potentially once you are 3-6 months in arrears the lender may then register a default against you. Failing to resolve this default could lead to the lender taking you to court over the debt and this could result in a county court judgement being registered against you. If you pay the debt within 30 days of a judgement being made against you, you can request that this judgement is removed from your credit report.

There are 2 main credit agencies within the UK being Experian and Equifax. By visiting their website you can request a copy of your credit report. This report will hold all your credit information covering the last 6 years. Have a good look through this and make sure it all looks correct. If you have a dispute, speak to the lender directly to try and resolve.

There is also a company called CheckMyFile and they produce a single credit report which shows data from both Experian and Equifax which is a good place to start.

When looking to borrow money there are possibly many ways in which this can be achieved such as:

• Remortgage – Could you take out a new mortgage with your existing lender or another lender from the market.
• Further Advance – May be your existing mortgage lender provides further advances, so you can take out further borrowing from them. This would also be secured on the property.
• Unsecured Loans – Your high street banks offer unsecured loans plus there are many online lenders who could possibility help.

You should always explore all the borrowing options you have available and take your time to calculate what is the most cost effective. A mortgage broker, such as The Money Hub, could help you with this and give you some advice.

From application to completion it normally takes around 4 weeks. To ensure a smooth application you should:

• Answer the questions your adviser asks fully and in detail.
• Provide all the required documents promptly.

The mortgage and loan advisers at The Money Hub would be happy to help you. You can get in touch by completing the enquiry form above or call the office. Please have copy of your credit report to hand as this would be needed to give you an idea of your options.