Are there different types of personal loans?
There are numerous different types of personal loans available – each serving a different purpose and aimed at people with different credit needs. We’ve listed a few below but this list isn’t exhaustive, be sure to do your research before applying for a loan.
Payday Loans – these types of loans are often very short term by design. They’re often repaid back on the borrower’s next payday. Typically these can be more appealing to those who may struggle to access credit because of poor credit management in the past. Payday loans do tend to have a high interest rate because they are aimed at those with bad or poor credit.
Guarantor loans and non-guarantor loans – Key differences here are that a guarantor loan has a requirement for a third party to be jointly responsible for repayments. This ensures that should the original borrower be unable to keep up with the agreed repayments, the named guarantor will be liable for payments. Similar to a payday loan, guarantor loans are also aimed at customers who lenders may deem more riskier and very often those with a less than perfect credit history. Non-guarantor loans are the opposite, so the borrower is the only one responsible for repayments.
Short term loans – similar to payday loans, these types of loans tend to be for a relatively small amount, some lenders offer loan amounts from £100 or less. These are then repaid over a short period, for example between 3-12 months. The rates on these loans can also be high in comparison to other traditional loans because they are aimed at those who may not be able to access high street finance typically.
Unsecured loans – this is simply a loan where no collateral is secured against the original loan amount. The loan amounts and terms themselves can vary, ranging from relatively small amounts to much larger loans for home extensions or the sort.
Do 118 118 Money offer unsecured personal loans?
Loans from 118 118 Money are unsecured loans, so you don’t need to secure them against anything or have a requirement for a guarantor.
Our loans are fixed rate, this means the monthly repayments won’t change over the loan term.
118 118 Money offer personal loans in the UK from £1,000 to £5,000 (subject to eligibility) over a period of 12 – 36 months. You can use our eligibility check to find out if you’ll be accepted, this doesn’t impact your credit score unless you choose to complete a full application.
Can I get a personal loan with bad credit?
If you’ve applied for an online personal loan and been rejected, it may be that you did not meet the lender’s eligibility criteria at the time.
Or you’ve got bad credit, or no credit history at all which can result in difficulties when applying for a personal loan. Missed or late repayments may impact your credit score; but some lenders do consider applications from those with an adverse credit history.
At 118 118 Money, we do consider applications for a personal loan from those with a less than perfect credit background. You can use our eligibility check to see if you’re eligible for a loan with us, without impacting your credit score.
Is a credit card an alternative to a personal loan?
This is dependent on the loan amount you need and what period you wish to take the borrowing over. If you require a relatively small amount over a short period, then a credit card may be worth considering. With credit cards, you can use up to the agreed credit limit and if you repay the full balance by the due date, then you aren’t likely to incur any interest charges. If only the minimum payment is repaid on the due date, then the balance will have interest applied to it. It’s also worth considering that with credit cards some lenders may also offer additional incentives such as loyalty points or air miles with each purchase too. A feature you’re unlikely to find with a personal loan.
However, your credit history and personal financial information will influence which credit cards you may be eligible for, if any. But yes, credit cards can be an alternative to a personal loan in some circumstances.
The 118 118 Money Simple Interest Rate Card comes with a guaranteed credit limit and guaranteed APR, click for further information on our credit card. We also offer a pre-application eligibility checker which can provide an indication if you’re likely to be accepted, all without impacting your credit score. Full applications require a full credit search.