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Average personal debt in the UK has risen above the ฃ4
0
mark for the first time ever according to recent research from Datamonitor. In February 2005 figures were published which showed that debt on personal loans
credit cards
finance deals and overdrafts amounted to ฃ4004 per UK adult by the end of 2004. Credit borrowing it seems is still at a very strong level
despite last year's interest rate rises and an uncertain housing market.

Borrowing on bad credit personal loans has contributed to this debt figure too. There has been a steady increase in the number of applicants applying for bad credit personal loans in the UK. CCJs
mortgage arrears and house repossessions are at an all time low
allowing borrowers to break free of the traditional chains that have prevented them from being accepted for personal loans on the back of a bad credit history. This has made bad credit personal loans more accessible to consumers
with loans companies more willing to extend credit to people with a bad credit history based on income-debt ratios and the ability of the applicant to handle debt responsibly.

Facts about bad credit personal loans

Bad credit personal loans are ideal for people who have found it difficult to secure personal loans in the past because of a bad credit record or for tenants. They are issued by specialist loans providers who lend money based on criteria other than your full credit history. If you have CCJs against your name
or if you have bad debts
mortgage arrears or have been declared bankrupt
then these specialist loans companies will be able to help you.

There are essentially two types of personal loans available for people with a bad credit history - secured bad credit loans and unsecured bad credit loans. Secured loans require collateral
such as equity in your home; unsecured loans do not officially require collateral
but it does help if you are a homeowner.

Bad credit loans will adopt a higher APR than standard personal loans. An APR that is 2% to 4% higher than the APR on standard personal loans is not unusual on a bad credit loan. The total amount available for borrowing will be less too
and minimum monthly payments are likely to be higher as well.

A bad credit personal loan is a good opportunity for people with bad credit to start repairing their credit record. Time is a healer in this respect
and the longer you can go without defaulting on your personal loans repayments
then the better your credit record will become. In fact
many providers of bad credit personal loans will switch you to a mainstream personal loans deal with more favourable rates if you can prove your ability to repay for the first two or three years of the loan term.