Unsecured Loans for Bad Credit
All loans can be split into two types: unsecured loans and secured loans. There is often confusion about the two, so it’s important to be aware of their differences when you are looking for a loan.
Below, we have outlined the main differences between secured and unsecured loans for bad credit and for business use.
Secured Loans Vs Unsecured Loans for Bad Credit
Secured and unsecured loans are very similar, except for one key difference. The former are also known as ‘homeowner loans’, but are commonly called secured loans as they are ‘secured’ against a property, which provides security if the borrower does not pay their loan back. This means secured loans are usually for larger amounts of money.
- Direct lender, Not a broker
- CCJ’s & Defaults OK
- Fast payout
- Best Credit Builder 2016 (Moneynet Award)
An unsecured loan, however, is any loan that’s not secured against a property, so usually this means they are for smaller amounts of money. Because they aren’t secured against anything, unsecured loans are much more dependent on your credit score as an indicator of your likelihood to pay back the loan, which means they can be very tough to get if your credit score is low.
You're borrowing £4,000
Over a term of 36 months
Repayment £195.16 per month
Total repayable £7025.76
Interest rate 49.9% (variable)
Representative 49.9% APR (variable)
Unsecured Guarantor Loans
However, even if your credit score is low or you do not own your home, you may be able to get an unsecured guarantor loan from Amigo. This is because the guarantor loans we offer are based on relationships and trust. When you provide a guarantor who promises to make the payments if you don’t, Amigo doesn’t need to secure the loan against a property or make lending decisions based on your credit score, as long as you are not currently bankrupt or on an IVA (or similar).
Your guarantor just needs to be someone you know well – somebody like a parent, a friend or even a colleague. If their credit history is good and they are aged 18-75, then they can be your guarantor and help you get an unsecured loan even if you have a poor credit score. While we accept homeowner and non-homeowner guarantors, a guarantor who owns their own home is much more likely to be accepted; otherwise they must have a very good credit history.
An advantage of a guarantor unsecured loan for people with bad credit is that it could help you to repair your credit score, providing you make all your repayments on time every month and keep up with all your other financial obligations at the same time.
Unsecured Loans for Small Business Owners
Running a business can be unpredictable. Sometimes you may need to foot costs that you didn’t expect, or maybe you want to expand and grow your business. As an individual business owner, the costs of operating can be daunting. Amigo’s unsecured personal loans can be used for any responsible purpose, including investing in your business, and can be a great way to help with business costs if you individually have a low credit rating or have had trouble getting a business loan elsewhere. Provided that you personally can afford the repayments each month, an unsecured guarantor loan with Amigo could be an option for you and your business.
Unsecured guarantor loans are a great option for small business owners due to their flexibility and the fact there are no upfront payments or fees. You can choose to pay your loan back over a period of between one and five years, ensuring your loan is a help and not a hindrance.
How do I apply for an Unsecured Loan?
Having a trusted friend or family member act as a guarantor for your unsecured loan means you could borrow without added pressure, and even start to improve your credit score. Does this sound like the borrowing option for you? You can apply for an unsecured guarantor loan right here on our website. If you have any further questions, however, please feel free to contact a member of our team for advice, or visit the guarantor loans page to find out more about unsecured guarantor loans from Amigo.