If you find yourself in a financial pickle after the festive season, don’t worry, you are not alone. As it turns out, millions of British citizens are struggling to catch up with their payments in the wake of the festive season. The BBC recently published a piece detailing the type of debt Britons were already in before the festive season commenced. The statistics show that the country has £22 billion outstanding in credit card debt…and then the spending began. Those figures must be astronomical by now!
In a poll hosted by YouGov, it was found that a large majority of the British population relied on credit cards to get through the festive season and that some credit card holders still missed payments on their household bills, just in order to “get by”. This is also mentioned in this article by Money Advice Trust. Of course, if you were one of these people getting yourself into further bad credit over the festive season, you will be living with the fear of being blacklisted looming over your head. And just when you start working out the figures, you are faced with the unavoidable fact that you need to start spending this year’s hard earned money on paying off 2019’s debts. Not a great start to the year, is it? No, but there is a light at the end of the tunnel.
There are ways that you can get your debt settled sooner and preserve your future credit rating. One option is to seek out loans for bad credit, so that you can either personally consolidate your debts and get everything paid off at once, or settle the highest outstanding debts to provide some financial relief.
What Type of Loans Can I Get With Bad Credit
Below are a few avenues you can investigate, if you wish to get a long term loan to help bad credit or simply need financial relief to get you through the start of the year.
If you are struggling to get a loan because of your poor credit rating, you can try to opt for a guarantor loan. There’s a catch though. You will need to have a spouse or family member sign as a guarantor, which means that they will cover the outstanding balance (be liable for) for you, if you default on your payments.
Unsecured long term loans
If you can’t get a family member or spouse to accept liability (be a guarantor) on a loan for you, you can opt to apply for a long term loan to help bad credit. Unsecured loans have the convenience of being flexible, affordable, and readily available in amounts of up to £20,000. These loans are typically approved and paid out within 24 hours. Long term loans are better suited to individuals with bad credit than short term loans as the cost of the loan is spread out over 1 year (or longer) and the interest rate attached is lower, which makes managing the loan repayment easier.
Loans from family members or friends
There’s always the option of asking a family member or a friend to provide you with a loan to get through a difficult month or to pay off high debt. Of course, loaning money from family and friends can get messy – there’s always strings attached. If this is the option that you choose to go with; make sure that you discuss the nature and terms of the loan thoroughly and that you have a personal agreement drawn up that serves to protect both parties.
Advance on your salary
Some companies will accommodate their employees by allowing them an advance on their salary. This is not exactly a loan, but getting a bit of your salary earlier than planned may help you get through a tricky month. At the same time, it also might not fully solve or alleviate financial problems you are experiencing, as you are merely receiving a bump on the salary you would receive later on. There’s no actual extra cash introduced to the situation.
How Long Term Loans Play a Role in Building Better Credit
You might wonder how applying for a long-term loan to help bad credit actually works. Long term loans provide you with affordable monthly instalments that are spread out over a year or more. Every time you pay the full amount of the monthly instalment (or more) on time, it goes towards building a more positive credit rating. Keep the payments well managed throughout your loan term and your credit rating will reflect as such.
When it comes to overcoming the plight of debt and bad credit, a methodical and calm approach is required. Keep focusing on reducing your unnecessary expenses, keep an eye out for decent loans you can use to consolidate debt and ensure that you’re handling your existing debt/credit responsibly.