Alternatives to unsecured loans
If you’re not sure whether an unsecured loan is right for you, or are struggling to get an unsecured loan, some of the potential alternatives you could explore include:
A secured loan requires you to put forward an asset that you own, often your house or car, as security against what you borrow. This safety net for the lender to fall back on if you don’t make your repayments means secured loans often come with lower interest rates and are available for larger amounts than unsecured loans. It may be easier to get a secured loan if you have bad credit as well. However, the risk to you as the borrower is that you could lose your asset to the lender if you fail to pay back when and what you should.
» COMPARE: Secured loans
With a 0% purchase credit card you can buy goods and services using the card and won’t be charged interest on what you spend for a set period of time. As long as you pay off what you owe before the interest-free period ends, it’s possible to borrow and avoid paying any interest at all. Be aware that high interest rates can start to apply if you don’t pay your card off in time and interest-free periods won’t be as long as the longest unsecured loans. You might also not be able to borrow as much on a credit card as you can with an unsecured loan.
» COMPARE: 0% purchase credit cards
If you only need to borrow a relatively small amount for a short period of time, you might want to consider using the overdraft on your bank account, if you have one. Importantly, you'll need to check if an overdraft facility is available and the rate of interest payable.
» COMPARE: Bank accounts with overdrafts
If you’re struggling to get approval for an unsecured loan, a guarantor loan might be another option. You’ll need a friend or family member to act as your guarantor and effectively promise to repay your loan if you don’t. This safety net for the lender means you might be allowed to borrow where you previously weren’t.
» COMPARE: Guarantor loans
Bad credit loans
When bad credit is preventing you from getting an unsecured loan, you may want to consider a bad credit loan. You can expect the interest rates on these loans to be much higher than if your credit was good but, in the right circumstances, it could provide the lending solution you need.
» COMPARE: Loans for bad credit