£15,000 Loans for Bad Credit

Updated: April 28, 2024 Author:

Key takeaways: The market for high value loans for people with bad credit is necessarily limited because of the risks attached. Some lenders service this sector but expect high interest rates and short repayment periods, plus you’ll need to pass an affordability assessment. There are ways to improve your status and financial reach and other options like Credit Unions.

A loan of £15,000 partnered with a bad credit rating is not a match made in heaven, but if you’ve approached mainstream or high street lenders, you already know this.

Bad credit makes you a high-risk borrower, so you may need to look elsewhere for finance, as regular lenders only want customers with a good or high credit rating. Bad credit lenders tend to look at creditworthiness over credit scores, but each lender has different criteria. 

There are a handful of companies on our list of bad credit loan direct lenders who will provide loans of £15,000, and there are ways you can make your application more attractive, like having a guarantor. There are also other options like Credit Unions.

Finding £15,000 loans for bad credit 

Joint Loans

A joint loan will allow you to team up with someone with a better credit score than you, potentially allowing access to funds you may not reach on your own. 

Two incomes mean a better affordability assessment, making it easier to reach the criteria set by lending institutions. If the party you borrow with has a higher salary, this can increase the chance of approval and offer access to a lower interest rate.

A joint loan agreement makes both people ultimately liable to repay the loan. However, as long as the repayments are made, you can split them between you and the other party in any way you wish. Late or missed payments will appear on both credit records even if just one of you makes the repayments.

Guarantor Loans

A guarantor loan has the financial support of a third party, a bit like bringing in another person on a joint loan. However, they are not an applicant – you are the sole applicant, and the loan is in your name only.

A guarantor guarantees that they will repay the loan if you default. If the guarantor loan is secured, then it will be secured on their property or assets, not yours. If you miss payments, the loan company will ask the guarantor to take over the loan. If the guarantor starts paying back the loan, it will appear on their credit record as a debt.

A guarantor is like a financial safety net. It makes it easier to borrow money with bad credit. Your guarantor will need a good credit rating for the loan to proceed. It’s usually helpful to choose a guarantor who is also a homeowner. From the lender’s perspective, there is less risk because of their excellent credit history and property ownership.

A guarantor loan is just like a regular personal loan. The loan may be secured or unsecured with a fixed term and monthly repayments. You will still have to pass the lender’s affordability test, as will your guarantor. 

Affordability is a serious issue for lenders, and they won’t waive this just because you have a guarantor. Failing to adhere to affordability criteria can lead to interventions from the Financial Conduct Authority (FCA) which ultimately, can put a lender out of business.

Some lending institutions opt to pay the loan funds to the guarantor in the first instance, with a cooling off period of 14 days in case they change their minds. This is also so the guarantor can verify precisely how much money they are co-signing for.

Secured Loans

£15,000 ranks as a high-value loan, and most companies will require some additional security before they agree to lend. Loans can be secured on a vehicle or your property.

If you own a property with a mortgage on it, a secured loan is classified as a second charge on the title; that means it ranks second in order of priority when it comes to paying out. That could be because you sell the property, or the first mortgage holder goes for repossession because there have been too many defaulted repayments.

A second charge secured loan can only be secured against the equity in the property. This is the amount of clear funds remaining after the first mortgage has been repaid based on the actual sale proceeds or a notional market value, which the lender will calculate. Additional security can be essential to finding a loan of £15,000 with bad credit.

Credit Union Loans

Credit Unions are a good option for someone with a bad credit history as they are generally more lenient. Credit Unions are set up differently from banks. Because the money they make goes back to their members – usually in products and services – they are more likely to accept high-risk borrowers.

How easy it is to get a Credit Union loan differs from one Credit Union to another. Each union has its own structure, interest rates, and fees. You will need to join a Credit Union and become a member, and new members can pay higher rates than established members. Eligibility and rates can also depend on your financial status and whether you have savings with a Union. 

It’s worth shopping around to find a Credit Union that will offer you the best terms and interest rates for a loan of £15,000 which is high value. Some Credit Unions stipulate that you save with them before they lend money. There may be a qualifying membership period before you can borrow money, and there may also be a borrowing limit. Some charge for membership and will have a minimum credit score requirement if you want to borrow from them. For a loan of £15,000, you may need a guarantor.

There is a cap on the interest rates Credit Unions can charge on loans in England, Wales, and Scotland, limited to 3% per month, equivalent to an APR of 42.6%. Interest is calculated on the reducing balance, so you pay less interest as the balance decreases during the loan term.

Credit Unions charge higher interest rates than banks and building societies would quote for personal loans because they accept people who are higher risk, but this makes them a good option for those looking to borrow with a bad credit history. If you are accepted, you may be offered a longer repayment period.

Are Debt Consolidation Loans a Good Idea? 

Consolidating multiple smaller loans and debts into one lump sum of £15,000 can mean a lower overall monthly repayment because the interest rate is lower. Plus, you don’t have to worry about multiple payments at different times every month. However, this can prove more expensive over the long term as it takes longer to clear the debt in full.