If you have a bad credit rating then you will likely find that it is not easy to secure a loan from a mainstream lender. In many cases, the best option will be to look for a lender that specialises in working with people with bad credit.
The sub-prime credit market is quite limited. There are a lot of payday loan companies and doorstep lenders that offer very high interest rates, but they are not the only option that you have. There are some reasonable and ethical quick loans lenders that offer short-term loans for small amounts and that are ideal for those looking to rebuild their credit rating.
Why Avoid Brokers?
A lot of people who have poor credit ratings opt to borrow via a broker. This can be a good option if you have no idea which companies to work with for your next loan, but working with a direct lender is often the best choice.
When you use a broker to get a loan, you are giving up one aspect of control. Brokers often get commission for referring customers to different loan companies, so they have no reason to make sure that you get the best possible deal. Some brokers also charge a fee to the borrower, so this means that you end up out of pocket in the long term – if the fee is added on top of the loan you could end up paying even more interest.
While some brokers will simply ask what you want, then find you that deal, others may require you to go through some extensive back and forth as they try to agree terms. This means that applying for a loan becomes a process that drags out over an extended period of time, instead of something that you can do quite quickly.
Finding a Direct Lender For Bad Credit
The one thing that brokers have going for them is that they have a good knowledge of the marketplace. However, it is fairly easy for consumers to access the same information these days. Many of the companies that allow you to check your credit rating offer lists of lenders that are likely to accept you based on your credit history. You can use this, combined with price comparison tools, to find the best possible deals.
Applying straight to a lender will give you a better deal by saving loan arrangement fees and ensuring that you know exactly what you are getting in terms of interest. It also ensures that you remain in control of your financial information and that you know exactly what kind of credit searches are likely to be done on your profile.
Before you contact a direct lender for a loan, do a search with the BBB and find out whether there are any complaints registered with them. Check that they are fully licensed, and look for independent reviews too. If you have any concerns about the reputation of a company do not give them any of your information.
There are a lot of reputable direct lenders out there but there are many that exist purely to prey on people who have bad credit and are desperate to access financing options. For this reason, it is imperative that you do some due diligence and research lenders carefully. Borrow only what you need and can afford to repay. Don’t be tempted to borrow a little extra to “treat yourself” because you will pay many times over in extra interest. Use the credit wisely to rebuild your credit rating and you will be better off in the long term.