Worried about your CCJs?
Having County Court Judgements (CCJs) against you in the past six years does not exclude you from getting a loan. However, as these appear on your credit history, lenders will consider the CCJ when making a decision on your loan. If you are confused about the different loan options available to you then read on. Lenders may feel that you are a bigger risk of missing repayments. Therefore, a CCJ loan will often come with a higher interest rate or you may be asked for some form of collateral. Each CCJ loan will also have very specific criteria for acceptance.
Short term loans
As the title suggests, a short term loan is a loan repaid over a short period of time; usually between 3 and 6 months. These types of loan do come with a high representative APR, but recent legislation has capped interest at 0.8% per day. You can expect to pay around £25 in interest per £100 borrowed. These are not a long term solution and should only be used in an emergency over a short period of time.
Guarantor loans will sometimes allow you to take out a loan when you have a CCJ. But you need either a friend or relative to guarantee the loan. This person will need to make your monthly repayments if you default on the loan. Guarantor loans can also offer a more competitive rate than short term loans and you can often borrow higher amounts. The rates can also be much higher than personal loans that are aimed at individuals with good or excellent credit ratings. Whilst these lenders will accept you even if you have a CCJ, your guarantor will be credit checked and will need to meet strict criteria. They will often, although not always, need to be a homeowner, between certain ages and have a good credit rating. You will need to check the individual requirements for each lender as some will have specific criteria for your guarantor and for you. For example, some lenders might only accept your application if your guarantor is over 25 years old.
If you don't have a bank account then you could look at doorstep loans. However, these do have a very high APR and the maximum loan you will be offered is usually £1000. These loans differ from other CCJ loans as they are not paid into your bank account. After your application is received you get a home interview with a representative of the lender. Your application is then assessed and a decision made within 3-5 working days. The cash is then delivered to your door. Repayments are collected the same way as delivery. A representative will visit you once a week to pick up your repayment. Due to this method of repayment, the lender will have acceptance criteria based on where you live. It is also a very good idea to make sure you get ID from the person collecting the repayments.
Logbook loans are another loan with high interest rates but they can be used if you have a CCJ. For the lifetime of the loan, the lender takes the logbook (vehicle registration certificate) for your car. As the lender takes your logbook they are regarded as the registered keeper of your car, therefore missing a repayment could mean that your car is quickly sold. They also have a very high APR and whilst you can often borrow up to £50,000, it is dependent on the value and age of your car. Due to the risks of losing your vehicle, a logbook loan really should be the last resort. Lenders also have strict criteria over which cars they can accept as collateral so you’ll need to do your research before making any applications.
Mark joined Choose Wisely in 2015. He continues to work in close contact with the providers, brokers and journalists operating in the world of consumer credit.