If you need to borrow money with a low credit score, you may have the option of taking out an online loan. Online loans are offered by both financial institutions and personal lenders. They can be a good way to find a lender who doesn’t require a good credit score, or any credit score at all.
Types of Loans for People with Low Credit Scores
There are four main types of online loans available for people with a low credit score or no credit.
- Payday loans: Payday loans allow you to borrow a small amount for a short period of time and pay back in a single lump sum. For approval, lenders usually depend on your monthly income instead of your credit score. In the UK, you can borrow up to £1,000 with a maximum interest of £24 per month. Usually, you have to pay it back within one to four months
- Logbook Loans: Logbook loans are another form of high interest loan which is secured by your car or other vehicle. You can borrow up to 50% of the price of your vehicle. It also has a longer repayment time of around 78 weeks.
- Personal Installment Loans: This is a loan designed to be paid back in small installments over a period of more than one year. Mostly unsecured, this one of the most affordable loans for people with a low credit score or no credit.
- Peer-to-Peer Loan: Also known as a P2P loan, this is an online loan where you borrow money from private lenders instead of financial institutions. It can be obtained from specialized websites with many different lenders.
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