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Bad Credit Instalment Loan in the UK

Written by, Marija Petkova

Updated November, 10, 2022

Getting a loan from a bank can be a challenge if you have a bad credit score, but there are many loan providers who specialise in loans for people who have a poor credit history.

Here are the best lenders where you can find a fast, bad credit instalment loan.

  • Loan amount:  £300- £1500
  • Representative APR: 1296.5%
  • Loan term: 3-6 months
  • Rating: 4.8/5

  • Loan amount: £100-£1000
  • Representative APR: 1186.40%- 1185.60%
  • Loan term: 3-9 months
  • Rating: 4.6/5

  • Loan amount: £500-£5,000
  • Representative APR: 59.9%
  • Loan term: 12-36 months
  • Rating: 4.4/5

  • Loan amount: £150-£750 (up to £400 for new customers)
  • Representative APR: 1266.6%
  • Loan term: 1-6 months (multi-month loans)
  • Rating: 4.4/5

  • Loan amount: £150- £600 (up to £1,000 for previous borrowers)
  • Representative APR: 1307%
  • Loan term: 4-6 months
  • Rating: 4.2/5

What Are Instalment Loans For Bad Credit?

Instalment loans for bad credit are loans designed for people who either have bad credit or no credit history and who prefer paying back the loan in smaller instalments rather than in one lump sum.

This type of loan can be taken out for personal, business, or lifestyle purposes, including:

  • Urgent car repairs.
  • Debt consolidation (paying off expensive payday finance or credit cards).
  • Home improvements.
  • Unexpected bills and other expenses.
  • Dental and medical treatment.

Can I Get an Instalment Loan For Bad Credit in the UK?

The most important factor for getting a loan is a good credit score, but there are specialised lenders who might approve you despite your poor credit history.

If you don’t have a good credit score, then the next best thing you can show to a potential lender is your ability to pay back the loan. There are lenders that might deem you less risky if you have a steady income and a valid bank account.

Regardless of your income situation, you’ll still be unable to get a loan from a traditional bank or credit card company with a bad credit score. If you’re looking for an instalment loan with a bad credit score, consider a specialised lender, like Dot Dot Loans.

What are the eligibility requirements for taking out an instalment loan with a bad credit score?

If you’re applying for an instalment loan for bad credit from a direct lender, you’ll need to:

  • Be at least 18 years old
  • Be a UK resident.
  • Have an active bank account.
  • Have some form of income.

Most lenders would also require applicants to show that they’re not in an IVA (however, there are some who accept people with an IVA) or have recently declared bankruptcy, but they are more lenient regarding other negative items that might appear on your credit report.

For example, if you have had a CCJ in the past, you can still apply for a loan at QuidMarket.

How Do Bad Credit Instalment Loans Work?

Instalment loans for bad credit from direct lenders allow you to make smaller and more affordable monthly repayments over a set period of time. The repayment dates are set when the agreement is made.

However, when you take out instalment loans for bad credit direct lenders, you receive the funds in one lump sum.

One of the main advantages of taking out instalment loans for bad credit from direct lenders only in the UK is that it lets borrowers get smaller loans and spread the cost over a more manageable period.

However, a more extended payment period usually means a higher interest rate. The lender has to either charge a higher interest rate or cap the maximum loan amount you can borrow to mitigate the risk of lending the money to people with bad credit history. 

This doesn’t necessarily mean that your lender will apply a variable rate to your loan. The majority of lenders, including Cash ASAP, offer fixed APR rates, but whether they’ll be on the lower end, depends on the loan.

Securing the loan against an asset be it your car, property, jewellery, stocks, or bonds, can lower the interest rate, reduce the risk and raise your chances of being approved.

In this case, the secured asset serves as collateral and the lender can repossess it and sell it to cover the debt. Similarly, involving a guarantor can increase your chances of getting approved because it provides the lender a level of security in case you default on the loan. 

Repaying Bad Credit Instalment Loans

The amount you’ll need to repay depends on the loan amount and the loan term. The lender will provide you with a number and an APR after you apply. 

Some bad credit direct lenders that offer instalment loans let you choose the dates when you make your monthly payments.

Ideally, you can make your monthly repayments on the day that you receive your paycheck or close to it.

Most lenders automatically set up Direct Debit or use Continuous Payment Authority (CPA) to collect weekly or monthly payments directly from your bank account or credit/debit card.

Some loan providers, like CASH4UNOW, have a payment page where borrowers can pay their monthly rate. Others, like Likely Loans, have automated payment lines.

Note: Failing to make repayments may negatively affect your credit score. If you’re struggling to meet the repayment terms, make sure to contact the lender to discuss your circumstances.

Bottom Line

If you’re planning on taking out an instalment loan, but have a bad credit score, then the chances of your application getting approved by a traditional lender are slim.

The good news is that there are many specialised loan providers that can offer you a bad credit instalment loan. All you’ll have to do is find the most affordable deal out there.

My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.