£4,000 Loans for Bad Credit

Updated: July 28, 2024 Author:

Key takeaways: Borrowing £4,000 with bad credit is something many lenders can help with. Secured loans the most accessible, guarantor loans are next in line with Credit Unions providing the most affordable rates. Bad credit loan direct lenders have highest approval rates and competitive prices because all of their customers are in the same situation – struggling to get finance approved by banks because of a bad credit score.

How can you quickly get a £4,000 loan with bad credit?

Facing financial hardship due to external circumstances that you have little or no control over is something that is stressful, time-consuming, and worrying. While no one wants to be in this situation, there is a lot to be said about avoiding jumping at the first solution that promises to make everything okay. 

With the UK experiencing rather uncertain times since Brexit and the pandemic, many of us have had to turn to payday lenders, short-term loan providers, and other forms of financing. What we need to do now is find the right solution that will get you back on your feet. 

£4,000 is an amount that sits approximately at the overlap of small payday loans some need from one month to the next, and larger personal loans from High Street banks for things like home improvement. While you may think that the amount you’re looking to borrow will limit your borrowing options, it’s actually not the case in 2024. 

The most affordable way to get a £4,000 loan when you have bad credit will typically be by securing the loan against your car or house. Logbook loans typically let you borrow up to half the value of the vehicle being used to secure the loan. For £4,000, you’d need a vehicle valued at around £8,000. This reduces the risk exposure to the lender, who will in turn charge you a lower interest rate. Lower interest means less to repay in total, which means you are more likely to find the loan affordable.

What are your affordable options when borrowing £4,000?

While your credit score will result in you being charged more interest as you will be seen as more likely to miss a payment, you can apply for a guarantor loan in many cases. Here’s how this affordable type of short-term loan works: 

  • A £4,000 loan is typically spread across 12-36 months. This varies by lender. Some can offer five to seven years to repay. Given the higher cost because of bad credit though, it’s best to repay these as soon as possible.
  • A guarantor is a person you trust who will co-sign the loan 
  • If you fail to make a payment, the guarantor is liable for the whole loan -it transfers to their credit report, increasing the debt-to-income ratio, which can then make refinancing or securing new loans or credit cards more difficult.
  • The interest you will be charged will be lower as the guarantor reduces the risk 

The key point here is that you need to find a friend or family member with a good credit score who you feel comfortable asking for help. In many cases the discussion may not result in an instant decision, so it’s important not to make your prospective guarantor feel rushed or pressured. The lowest cost method would be using a guarantor loan through a local credit union. Importantly, all installment loans can help boost your credit score when repaid each month on time, so it’s possible you may only need a guarantor to get over the initial hurdle. Scores improve after the entries causing your score to be low drops from your credit report six years after the date it was reported. Finance does get more affordable!

Can you borrow £4,000 from a High Street bank with bad credit?

Many High Street banks offer an overdraft facility on their current accounts, and the interest will be less than a personal loan from a payday lender. Discussing your options with your local bank manager will give you access to a wider range of options. You may also consider looking into a money transfer credit card as a lower interest form of borrowing.

While having a bad credit score will reduce your chances of being approved for both of the above, there is still merit in asking your High Street bank for help. If nothing else, it will show you that there are other avenues out there other than payday lenders and the ‘guaranteed’ loans you will see advertised on social media. 

Can you trust direct lender loans if you have bad credit?

Owing to the significant number of people with a poor track record of managing finances, who are now struggling to get funds in emergencies, companies are being creative with their marketing, and sometimes, for your benefit. Not always though. Direct lenders can help secure finance by only running a soft credit check so as not to harm your credit score any more. Loan brokers acting as intermediaries may use wording like no credit check loans, when in fact, they only mean they don’t run the credit check, but the lender you’re introduced to almost certainly will. Reputable direct lenders will always conduct at least a soft credit check and require evidence that you can afford the monthly repayments.

How do you safely borrow £4,000 with bad credit?

These key points will help ensure you don’t fall victim to payday lenders who simply want to make a profit from your financial misfortune: 

  • Remember that credit checks are just for lenders to research your financial track record. It’s historic data only. The longer ago the entries, the less of an impact it has on their decision to approve or reject your application. The affordability of the loan repayments is the most important factor to lenders as they cannot leave you without enough to live on
  • If you see a promise of easy loans with no checks, remember that things are often too good to be true 

Borrowing £4,000 using short-term loans with bad credit is something many lenders can help with. Taking a moment to breathe and reminding yourself that there are always other solutions will help remove some of the pressure and enable you to make the right decision.