Emergency Loans

Borrow now and pay it back later with no worries

An emergency loan is sometimes necessary, especially if you need to access money quickly. Unfortunately, loans that offer fast access to large sums of money often have a bad reputation, as they can come with extensive interest rates and strict payment terms.

At Believe Loans, we give you access to reputable lenders – specialist loan providers who provide emergency loans, without any of the sharking. We’ll help you get an emergency loan that solves a short-term problem and doesn’t create more issues.

High late fees

In the past, payday lenders could charge excessive interest, and some people would end up paying double what they borrowed. However, the Financial Conduct Authority recently changed the rules to lower the fees associated with late payments.

Despite these new rules, people can still get into trouble if they can’t meet their monthly repayment obligations. And if you fail to make repayments, your credit score is damaged.

You’ll pay more interest if you have a low credit score

Many payday lenders will offer money to people with bad credit because they can introduce a higher interest rate to the loan. Meaning not only do you have to repay the money you borrow, but you have to factor in a ridiculously high interest repayment too. Putting you in a much worse financial situation in the long run.

While the interest rates are capped at 0.8% a day, the payment amounts can still be challenging for people with financial difficulties.

Different types of emergency cash loan options

Luckily, plenty of emergency loan types offer more security than a payday loan, and most come with better interest rates. Your choice should depend on your circumstances, but our brokers can help you decide.

Personal loans

Also known as unsecured loans, this form of borrowing allows people to borrow up to £25,000 over a short period of time. They differ from secured loans as borrowers don’t have to offer up any collateral, but this also means you can’t borrow as much money – or pay it back over several long years.

Pros:

• Zero collateral: Secured loans often offer larger amounts, however to access it, lenders require people to offer up a valuable asset (usually a property) as collateral. These requirements aren’t in place when taking out unsecured loans.
• More security: Most personal loans have strict terms in place, but this is also beneficial for borrowers as they know exactly what they’re getting into.
• Borrow higher amounts: Unsecured loans are great if you want to borrow more money than your credit card allows.

Cons:

• Credit score: The main downside of unsecured loans is your application depends on the results of your lender’s credit and affordability checks. Lenders are hesitant to offer money to people who don’t meet the eligibility criteria, so you have to have a good credit score to make the numbers work for you.
• Short repayments: While most unsecured loans have repayment periods that last longer than six months, you’ll still have to repay what you borrow relatively quickly.
• Penalties: If you default on your repayments, your lender could call bailiffs to recover the outstanding amount in valuable goods. In severe cases, you could also find yourself in court.

Poor credit loans

A poor credit loan helps people borrow money, even with a low credit score or no prior credit history. These loans often cover major expenses like paying off bills, purchasing a car, or making home improvements.

Typically, lenders offering these types of loans assess the borrower’s affordability rather than relying solely on the borrower’s past credit history. So, you could still borrow more if you have a regular income, whereas most lenders focus on an applicant’s credit score.

Pros:

• Less worrying: All lenders perform credit checks to see whether an applicant is viable, but bad credit loans are more about your monthly income than you credit history. The more disposable cash you have each month, the higher your loan amount could be.
• Boost your credit score: A poor credit record can impact your ability to get a mortgage or new car, but when you take out a bad credit loan and make regular repayments, you’ll be able to build your credit file up, giving you access to more lenders in the future.
• Numerous lenders: Many lenders offer bad credit loans, and peer-to-peer lending apps continue to grow in popularity. If you can prove a good monthly income, you should be able to choose from a range of loan providers.

Cons:

• You might borrow more: As these loans depend on your income, some lenders allow you to borrow larger amounts. If you get carried away, you could borrow more than you need – and can’t repay.
• Hefty penalties: Many lenders will also have significant penalties to ensure people don’t default on their monthly repayments. It’s essential to check the terms before signing any agreement.

Guarantor loans

A guarantor loan is a type of loan that relies on the guarantee of another individual or legal entity, who is referred to as the guarantor. Lenders offer this kind of loan when a person might have poor credit or is on a low income.

Lenders will assess the guarantor’s income and credit report to ensure they can pay the loan back should the borrower default on repayments.

Pros:

• Secure your debt: Even if you pass a credit check, you can still use this type of loan to secure your borrowing. Lenders like having security, so offering a guarantor gives you access to a higher amount.
• Lenders assess your guarantor: As lenders have a guarantor to take responsibility for the loan, you don’t need an excellent credit score. The amount you borrow depends on what your guarantor agrees to.

Cons:

• You have to find a guarantor: Most people will rely on family members to act as guarantors, but some people will naturally be wary of it, as they’ll take on the responsibility for your loan.
• Defaulting can impact all involved: If you meet your repayments, you can build your credit score. However, when a guarantor defaults on the loan term, it affects both parties and can make borrowing money harder in the future.

Why Use Believe Money?