Recent personal loans Q&A
Getting a van loan with bad credit
Getting a loan to buy a new van if you have bad credit can be difficult however, it is certainly not impossible in todays finance climate. The key thing you have to do when looking for a van loan when you have bad credit is to fully appreciate the repayments you are going to make and be able to adequately budget for them. This means that before you decide on a loan, you should take plenty of time to look at all of the loans available as they do vary significantly in cost and interest charges.
What are the advantages of getting a van loan with bad credit
Clearly the main advantage of a bad credit loan to buy a van is that you are actually able to get the money you need in order to make the purchase as it would not be possible through a mainstream lender. This means that you have an additional asset with which to carry out your work and can therefore potentially maintain a better income. Another advantage that you need to be aware of is that you can actually start to rebuild your credit rating through the successful repayment of your bad credit loan. Just because it is a bad credit loan doesn’t mean it doesn’t count towards your credit rating, so ensuring that your payments are made on time will increase your rating over time.
The disadvantages of a bad credit loan
You will find that the loan amounts you are able to get on a bad credit loan are not as large as those you could get with a personal loan. However you can potentially get up to £5000, which may be enough for you to purchase the van you require. The other major disadvantage is that you will pay very high interest rates compared to a mainstream loan “good credit rating” loan. This is because for lenders you represent a higher risk, no matter what the reason for your credit rating, because they do not have the reassurance that you will be able to make all of your repayments. This also means that it is quite high risk for you as well as you need to be able to make sure you are in a position to be able to make the repayments otherwise you could be rejected for a bad credit loan as well.
Are there any alternatives?
If you need to get a larger loan, or you want to be able to take advantage of lower interest rates you could potentially take out a guarantor van loan for up to £7500. In this case you will need to find someone who is willing to be your guarantor. What this means is that they will guarantee your loan will be repaid if you fail to make all of your repayments. If you make all of your payments then your guarantor will never be affected by the process, however you need to bear in mind that if you do end up not being able to make payments that they will be liable for the whole of the rest of the loan debt repayments and any arrears that have been built up.
There are other options if you have a poor credit history, another alternative could be to take out a secured loan against your home and use the funds to buy the van or vechicle you require. Secured loans against your home do however carry additonal risks and should also be carefully considered. It may be that taking out a secured loan is a cheaper alternative as you’ll be able to offer greater security to the lender and therefore you should be able to attract lower rate loans and deals against taking out an unsecured loan.
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