If you need a bad debt loan, lenders can help you get your finances back on track. Find out about recognising the best secured loan for you.
Copyright (c) 2009 Gordon Parkes
Bad debt can easily wreck your credit rating, making it more difficult to obtain any loans in the future.
However, if you have bad debts you may be able to escape them with a secured loan.
Bad debts are those that are unlikely to be repaid, and may be written off by the lender. While it might sound desirable to get current debts written off, it will have a very adverse affect on your credit rating.
One way to repair this is to take out a secured loan to pay off any bad debts. This is similar to debt consolidation, as you will be taking out a loan to pay off existing debts.
The benefit is that the lower interest rate of the secured loan means that monthly repayments will be reduced. If you successfully pay off the secured loan, this will go some way to restoring your credit rating.
Of course, if you already have a poor credit rating, you may think that it will be difficult to find a company willing to lend you money - but this is not always the case. In fact, there are plenty of companies who will lend to you, even if you have:
- CCJs.
- Defaults on previous loans.
- Mortgage arrears.
In fact, the hardest part of finding the right loan may be choosing the most appropriate lender for you.
If you decide to contact lenders yourself, you will have to sift through a great deal of information to find the loan that suits you and fits in with your budget.
To simplify matters, you could contact a broker. They will be able to search through hundreds of lenders and loans, comparing factors such as:
- Interest rates.
- Repayment terms.
- Arrangement fees.
- Other charges.
- Terms and conditions.
A professional broker will have contacts throughout the loans industry, so they will also have access to low-cost loans that you may not have considered. A broker will be able to find the best loan for you, depending on your circumstances and the purpose of the loan.
By paying off some of your debts, you will gradually be able to restore your credit rating, which will improve your ability to obtain low-cost loans in the future. A low-cost loan which is used to pay off your debt can help you avoid the high fees which may be charged for defaulting on unsecured loans, as well as helping you improve your credit rating.
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