Private Loans for Bad Credit

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Representative 277.5% APR Representative Example: Borrow £700 and pay £111.27 per month for 12 months at an interest rate of 140% per annum (fixed). The total charge for credit is £635.24 The total amount repayable is £1335.24. Representative 277.5% APR (variable). Your APR rate will be based on your circumstances.

Warning: Late repayment can cause you serious money problems. For help, go to

Sometimes ending up with a poor credit rating is unavoidable. Some situations are out of our control and before we know it; we’re in debt and unable to obtain credit from anywhere else. The problem is our needs don’t change just because we have bad credit. In fact, our need for a loan can become even greater. This then results in us being turned down for future loans, and every time we are it makes the problem worse.

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Who can apply for a private loan?

Anybody is welcome to apply for a private loan but those of us who have a bad credit rating may struggle to be accepted. A private loan is essentially a personal or unsecured loan that is provided by a lender to a member of the public. Those who have poor credit may find obtaining one harder than others.

But the good news is many of our below options are more geared towards helping people with bad credit. Each one can be used in lieu of traditional borrowing.

Small local lenders

You may have a small local lender near you. They often look like little high street offices/shops. They may be family owned businesses and operated by just a couple of people. Unlike banks and credit card companies they offer a more personal and tailored service.

This can be useful for people with bad credit, as it allows them to plead their case to a sympathetic ear. Those with bad credit may find that useful. Especially if your circumstances are not your fault. The lender may understand and come up with a solution which is helpful to you.

Credit Union lenders

Credit Unions are another useful way for those with bad credit to obtain a loan from a sympathetic ear. They are financed by members for members, so any money you borrow from them is given by their members. The interest you pay back then helps support other Credit Union members who also need loans. So for this reason they are often more open to helping as many people as they can.

The main advantage though is their leniency and the likelihood of being accepted for the loan. Credit Unions are known for being more understanding than banks. So if you’ve been turned down for a bank loan search online to see if you have a Credit Union near you.

Online only lenders

There are now more online lenders than ever. Many of them are payday loan companies offering instant or same day private loans, or other forms of short-term borrowing. They are for people who are in a financial emergency and need a quick burst of cash now to pay back when they next get paid. They are typically small sums of money which are easy to pay back once the borrower has been paid again. This also makes the loans easier to obtain, as they are small sums of money payday loan companies are usually much more lenient than traditional lenders.

Online private loans are also quick and easy to obtain too. They are usually paid into the borrower’s bank account the next working day after the application is approved. But it can be must sooner. Some online loans are actually called 15 minute loans.

Student loans

There are two types of student loans available. The first is offered by Student Finance England (SFE) and this is available for anyone who’s classed as a student either full time or part time. How much you can borrow depends on your circumstances, but these loans are designed to support students get by with their studies.

There is also private student loans that are offered by other lenders. You need to be a student to apply for them, and if you are you should consider these before any other form of borrowing. That’s because their rates are so much lower than other forms of traditional lending. Private student loans can be applied for alongside loans from Student Finance England, so don’t be afraid of applying for both if that’s what you need.

Borrowing from family, friends or even employers

If you can borrow from a caring friend, family member or responsible employer instead of anywhere else then you should consider it. Some people don’t feel comfortable borrowing money from people they know, but they often don’t charge you any interest for the privilege and there are no implications on your credit rating. However, there can be implications to your relationship if you don’t pay them back! So, if you borrow from someone you know make sure there is a clear understanding between you both.

Borrowing from an employer is a little different. They may see it as an investment in you as a person and employee. Remember your employer doesn’t have to lend you money, so if they do it may mean they think highly of you. So take this as a complement. It means they want you to stick around and do well.

Secured loans (attached to your home)

A secured loan is one that’s attached to your home. A mortgage is an example of a secured loan but there are other secured loans you can get. Some people prefer to get a secured loan instead of a private loan because they already have a relationship with the lender from their mortgage. So any further debt essentially adds to this. It can make sense too, especially because the rates are usually low and fixed for a certain period of time.

Having a pre-established relationship with the lender means the loan is much more likely to be approved. So if you have bad credit this can be a clever way to obtain credit. Your bank or building society may already trust you and may not be that put off. Remember though a secured loan is attached to your home. Failure to pay it back can have dire consequences such as the bank repossessing your house. So always make sure you keep on top of your payments. Secured loans can be a great idea, but sometimes it’s better to go for an unsecured private loan instead.

Key points

  • A private loan is a form of lending from alternative sources to banks and credit unions.
  • They are popular with those with bad credit who have been refused from mainstream lenders such as banks.
  • Students can also apply for private loans that aren't delivered by the DoE.

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