What to Expect When Applying for an Adverse Credit Secured Loan
If you need a loan but have a poor credit history then an adverse credit secured loan could be the solution.
If you have a bad track record of keeping up loan or other repayments, have county court judgements (CCJs) against your name, have an individual voluntary agreement (IVA), or have been declared bankrupt in the past, an adverse credit secured loan could be a way for you to borrow money.
A secured loan is any loan that requires the borrower to provide the lender with some form of security. For home owners this is normally the borrower's property, regardless of whether it is mortgaged or owned outright. The fact that you own a home means you will be able to apply for an adverse credit secured loan, but a bad credit history will mean you will be unable to get a loan with a very low rate of interest.
There are companies out there that specialise in loans for people who have no other option than to take out an adverse credit secured loan. However it is important to shop around to find the best deal - a broker who knows about the adverse credit secured loan market may be able to help you.
Some companies offer special incentives, gifts or extra low interest rates at the start of the adverse credit secured loan to get you signed up, but beware of these offers. You need an adverse credit secured loan with the best rate of interest that stays low until you have repaid the loan. A broker can help you find the best adverse credit secured loan for you.
When you take out an adverse credit secured loan, lenders will charge interest on the amount you borrow. This is referred to as the Annual Percentage Rate or APR. The amount you can borrow, the term available and the APR will all depend upon the equity you have in your property, the lender's view of your ability to repay the loan and your personal circumstances - including your credit history and how adverse your credit situation is.
When taking out an adverse credit secured loan you will be asked to sign a credit agreement, which should be read carefully as the terms are legally binding. You will also be required to submit a number of documents including a document showing your age, proof of residence, proof of ownership of house or equity and proof of your income.
Lenders will find out about your credit history such as bad debts and unpaid loans by doing a credit check with a credit reference agency such as Experian, Equifax or CallCredit. These agencies hold factual information about you and this allows a lender to check your name and address and your past credit history, including any county court judgements or defaults recorded against you. A poor credit record will not necessarily prevent you from getting a loan, but you will probably have to pay a higher interest rate on an adverse credit secured loan.
