Representative 49.9% APR. Representative Example: Borrowing £1,000 over 12 months, repaying £103.06 per month, total repayable £1,236.72. Interest rate 49.9% (variable).
I’m going to be defining a default loan as a loan that you may still be accepted for despite there being defaults on your credit file. A default is essentially a mark on your credit file that shows potential lenders that you have missed repayments in the past.
You’ll notice that our bad credit loans, short term loans, benefit loans and unemployed loans pages contain many of the same lenders as you’ll see here. Unfortunately, if you have defaulted on payments in the past, it’s likely that your credit file will have been negatively affected, making obtaining credit more difficult.
If you’ve defaulted in the past you are going to need to accept that prime finance, like bank loans at low APRs, is not going to be obtainable. The cheapest finance you’re likely to be able to find is going to be at around 39.9% APR. You will need to pass affordability checks (as is the case with pretty much any loan these days) and have to have regular income.
The cheapest rates are going to come from guarantor lenders, who offer loans from around between 39.9% to 49.9% APR. As you’ll likely have guessed from the name, you will need a guarantor to support your application. This individual will need to sign a contract stating that they will make the loan repayments if you do not or cannot.
As always when we talk about loans available to those with a bad credit history, you will inevitably come across high cost short term lenders (aka payday loans). I’m sure everybody reading this will have heard of them, and while they have their place you do need to be aware of the negatives. The ease of application and convenience of a quick payout is countered by the high cost and fees (if you miss payment). If you’re looking for default loans, it’s probably worth trying other options before resorting to a high cost short term loan at rates of 1500%
High APR unsecured credit could be an option. This is essentially the same as a standard loan, although priced higher and provided by a private company instead of a bank or supermarket. Rates range from around 35.9% to 99.9%. The lending criteria is tighter than high cost short term and guarantor lenders, but as you can see you could end up with a more favourable rate.
If you’re looking for a default loan you’re likely to be accepted for a logbook loan, or a secured loan. A secured loan is any finance that is secured against an item of value, whether that be a car, house, art or jewellery (a logbook loan is essentially a secured loan on your car, the company take the logbook and the car technically belongs to them while you repay. If you don’t make payments the car gets sold.)
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