£600 Loans for Bad Credit

Updated: July 28, 2024 Author:

Key takeaways: Finding a lender offering £600 loans for bad credit applicants is tricky, but can be done. Narrow your search to a specific type of credit. Examples include getting a personal revolving credit account, a guarantor loan, or using a pawnshop loan with an item of higher value as security. If you need money fast, emergency loans provide fast decisions, but no guarantees. Expect higher interest rates with a shorter time to repay, and affordability assessments to ensure you can afford to keep up repayments.

    Where Can I Get a £600 Loan?

    Companies providing personal loans and other types of finance often have minimum loan amounts starting from £1,000. Nobody wants more debt than they absolutely need. Particularly when you’re facing an uphill battle with hiked interest rates because of a low credit score. With bad credit it can feel like there aren’t many doors open to you. You may have already been rejected by your bank for a loan causing your credit score to drop even further. After any refusal, slow down, take a breather, and explore the options to secure a £600 loan because there are lenders around with lower minimums and can be more flexible with the interest rates.

    Look for specialist firms that can help you cover unexpected costs affordably. Particularly, bad credit direct lenders as it’s cutting out the middlemen, going straight to where the funds are released from, and asking them to have give some real consideration to your loan application rather than relying solely on automation. Some even offer loans in principle based on a soft credit check, helping you to know if you’re likely to be approved for the amount you’re asking for, or if affordability would mean a lower amount being offered.

    The Types of Finance Avaialable to Secure a £600 loan

    A Personal Revolving Credit Line

    You don’t need a credit card or overdraft to benefit from revolving credit. Lenders offer a personal line of credit letting you get approved once for as much as £1,200. With bad credit, limits begin lower, then increase gradually as your account is reviewed and the lender has proof you can manage the account responsibly. There’s no guarantee you’ll be approved for a £600 credit limit, but you can inquire if a soft check could be run by the lender to avoid applying only to find out they can only approve a max £200 loan as a starter limit. With this type of funding, the interest rates tend to be lower than using an overdraft and significantly lower than other unsecured loans such as a payday loan. 

    Companies like Drafty can offer credit from £50 to £3000 but you should only ever borrow the amount you need. Don’t be tempted to max out. The representative APR is 96.2% but keep in mind, that’s variable so the lower your credit score is, the higher this will be. You do only pay interest on what you use though and as long as you repay the monthly minimum, the repayment term is up to you. There are no late fees and no early repayment fees.

    Pawnbroker Loans

    If you have assets to offer as collateral, a secured loan from a pawnshop may be an option. They accept items of value up to the loan amount plus interest. Whatever you offer as security, must be of equal or higher value to the total amount repayable. It can be a more affordable option for someone with bad credit, who’s fell on hard times, and know they’ll be back on their feet within six months, which is the maximum time to repay most pawnshops offer. They don’t want to hold valuables for longer than need be.

    For a loan of £600, you’ll usually have to offer jewellery, watches, or technology as collateral. These can cost in the region of 150% APR and some may be approved with no credit check, although it will be subject to ID verification. The risk you ought to consider before pawning anything, is the items sentimental value. What’s sentimental to you and your family is cash for the pawnbroker. They don’t care if you don’t have the abiility to repay because they have your item to sell if need be. They may offer to extend the loan agreement, or they may sell your late Great Gran’s broach, or the retirement watch inherited form your late Grandad. It depends on the store policy.

    Guarantor Loans

    Unsecured loans (where you don’t borrow against assets) can be trickier to get with bad credit, more so if you’re in the credit invisible category- like new to the country or been working abroad for the past six years or more. If a secured loan isn’t an option for you though, don’t give up on the idea of getting an unsecured loan just yet. Guarantor loans for bad credit can be a saving grace when you need to borrow money without any assets worth more than the loan amount to offer as security. 

    These are available as secure and unsecured loans but the principle remains the same. You’ll pay the loan back in monthly instalments, plus interest. Where the guarantor part comes into play is if you fail to make payment. That’s when a third party – your guarantor – assumes responsibility for the debt. Guarantors can be subject to a soft credit check. The loan appears on the applicants credit file, but if you fail to repay, the loan transfers to the guarantors credit report, once they become responsible for repaying the loan. That can have consequences on their credit score as it will increaes their total amount of debt owed against their income.

    The greatest risk to guarantor loans is to personal relationships. If you’d rather not risk friendships over money spats, there are peer-to-peer (P2P) platforms that match borrowers to guarantors. The P2P lending space is riskier, and although the FCA has had its sight on regulatory oversight, they only apply to firms registered, and authorised in the UK. Many platforms are based outside of the country so don’t fall under the purview of the FCA code of conduct.

    How can I borrow a small amount of money fast?

    Money difficulties happen. It’s a fact of life. As an example: You wake up, head out to the car and it’s acting up. That could easily be a costly bill for a call-out, tow truck fee, parts, and labour. Alarmingly, that’s likely to be happening more. A report by the RAC revealed 26% of young drivers were putting off car repairs to save money. Fast forward two months, Experian reveals that among the 18 to 30 year olds, 16.6% had accounts in arrears. Meanwhile, they were racking up thousands in debt through dating apps. To put that in perspective, it was 10.1 million people behind on debt repayments.

    Before looking into borrowing money fast, see what subscriptions can be cancelled, if date nights can be postponed, the budget tightened, and before applying for small loans with fast approvals, tally up all of your debts and work out if you’d be better off consolidating some loans with a higher amount for an overall lower cost of borrowing. Paying off several loans under £600 is usually more expensive than taking out, for example, a £2,000 debt consolidation loan, rolling each small loan into one. It also makes it easier to budget monthly. And, the less your monthly outgoings become, the more disposable income you’ll have. Lenders take your overall debt repayments into account for affordability.

    If needed though, Emergency loans are available and can provide £600 as a short-term loan – the most common type being a payday loan. They’re designed to help out when you’ve found yourself in a tough spot but they do usually need to be repaid within a month. As the name would suggest, they’re to tide you over until the next payday. Before applying for this type of loan, check your budget can afford to repay the loan in a lump sum from your next pay. The sooner it’s paid, the lower it’ll cost. It’ll still be high, and even higher if you take it out as an instalment loan, repaying over several months.

    The FCA has capped emergency loans at an interest rate of 0.8% daily but to put that into perspective, you could pay up to £24 for every £100 you borrow. That means for a £600 loan repaid in 30 days, you would be paying back around £744.

    Can I get a £600 loan with terrible credit score?

    There are lenders that will approve on a £600 loan. The only thing they require is evidence you can repay it. The reality is that your credit score isn’t the issue. It’s the risk that the information on your credit files make you appear to a lender. If you’ve only recently been issued with a CCJ, you’ll be deemed extremely high risk, and receive quotes at the higher end of the APRs represented. Upwards of 1,500% APR in some cases. A few missed payments though over 6 months ago, could be viewed as less of a risk, with a quote of around 300% APR. Direct lenders are able to look in depth at your credit files, consider your application on merit of additional information you provide, such as a valid reason for late payments (in hospital, family bereavement, lost job and seeking advice, etc.)

    The fastest way to get a small loan is to approach a direct lender that can provide £600 loan based on a soft search credit check. Those don’t show on your credit file and while they don’t guarantee loan approval, they don’t show on your credit file to lenders. You’ll see them on your credit report, but they’re invisible to lenders.

    To increase your chances of having the loan approved…

    • Research your lender – knowing the lending criteria for the companies you want to apply to will give you a good idea of whether you’ll be approved or not, this way you can see if you have any crosses against the eligibility criteria or not.
    • Assess your own risk level – bankruptcies and recent loan defaults are likely to result in loan refusals by most lenders. You’d need to apply to a specialist lender who accepts applicants with the entries being reported on your credit reported. Some will approve on loans with CCJs that are older than 2 years, as an example. The specifics will be listed in their eligibility criteria. If you can’t find the information, call them and ask before applying. If possible wait these out and check if lenders have a minimum term where they’re willing to pass off these issues.
    • Can you make the repayments? – Lenders will want to know that you can afford the monthly repayments. Not borrowing from one lender to repay another. Having a stable income will increase your chances of passing the affordability assessment. Some lenders will give loans to those on benefits but regular income with the same employer in the last 6 months makes you more appealing to lenders.