Adverse credit can occur due to a number of reasons, including: late loan payments, missed loan payments, loan default, a CCJ, Individual Voluntary Arrangements (IVAs), debt management plans or even personal bankruptcy. Bad credit unsecured loans are often used to consolidate debt and reduce monthly loan repayments.
Bad Credit Unsecured Loans and High APR
Consolidating debt when good credit exists helps to lower personal debt. However, a bad credit unsecured loan regularly only serves to exacerbate financial difficulties. Bad credit equates to higher risk to lenders. Consequently, they charge a high APR on bad credit unsecured loans.
Many doorstep lenders charge 50-60% on bad credit unsecured loans. Worse still, Payday loans -- a no credit check loan -- charges borrowers upwards of 1000% APR. This means that those struggling with financial difficulties and adverse credit will be paying back huge amounts of interest.
