£9,000 Loans for Bad Credit

Updated: July 28, 2024 Author:

Key takeaways: With bad credit, getting £9,000 loans will be costly and hard to get approved. The best value and chance of approval are Credit Union loans. CDFIs (Community Development Finance Institutions) operate locally with several offering consumer finance, but the majority focusing on business loans. None can provide a no credit check loan. At the minimum, a soft credit will be required, as well as evidence of income, employment, and affordability. 

    Who Does £9,000 Loans for Bad Credit?

    Loan firms specialising in providing finance to people with bad credit ratings focus more on your ability to repay than what is reported on your credit files. When applying for £9,000 loans, lenders will require proof of income, and employment history. Some may accept income from benefits, while others won’t. The interest rates are higher because of the adverse credit history however, certain things can be done to lower the cost of borrowing, such as providing security to the lender or taking longer to repay, ensuring there are no balloon payments required to settle the loan early. The lowest cost loans with the most chance of approval will be through a bad credit loan direct lender.

    How to Approach Lenders with a Bad Credit History 

    When applying for finance when banks won’t help, either approach a broker or a lender directly equipped with prudent financial information for them to assess your current financial affairs. They need to be sure you can afford the monthly repayments for the duration of the loan. Expect to provide proof of income and proof of employment. There may be a financial assessment requiring them to calculate what percentage of your salary is left over for living. Loans can be refused if the lender feels that the repayment would put you into financial distress. If you can lower your monthly expenditure, do that for a few months to show that you have more disposable income to afford the monthly repayments. Most lenders will require the past few months’ bank statements to support your income claims. 

    About Companies Offering £9,000 Loans with No Credit Checks

    Loans with no credit checks aren’t possible. Those who claim they can do this will be basing the assessment on a soft credit check. Soft checks have no impact on your credit score. Hard checks do and those happen when you apply for a loan, unless the lender directly states they’ll assess your financial position based on a soft inquiry only. Some bad credit loan direct lenders do provide loans based on a soft credit check, plus additional assessments. 

    Most Approved Loans for Bad Credit 

    The type of loan most likely to be approved with a bad credit history is a secured loan. Secured financing is easier to secure because the lender has collateral that they can auction should you fail to repay. For a loan of £9,000, the tricky part is providing something of higher value to the lender to secure the loan against. Logbook loans can provide you with up to half of your vehicle value. Some may extend that to 60%. If you have a car, van, motorhome, or caravan with a market value of double the amount of the loan value, a secured personal loan from a logbook loan company may be worth considering.

    Alternative Methods of Securing £9,000 Loans

    Crowdfunding (peer-to-peer lending) 

    Several platforms operate on a peer-to-peer lending model matching borrowers with private investors. There is a higher risk and a higher cost when you have bad credit. Lending-based crowdfunding platforms are still required to conduct a credit check. This is mainly done to prevent fraud and to gauge the level of risk posed to investors. The higher the risk your credit profile shows, the more investors will ask for in the interest rates. There are rules set out by the FCA concerning unfair contract terms. Always read the fine print and understand the contractual obligations before entering into an agreement for any loan amount. 

    Credit Unions

    Credit Unions are co-operatives offering the best value on consumer loans. The vast majority can provide loans up to £25,000 repayable over 12 to 60 months. Caps of 3% monthly (42.6% APR) apply to small loans. £9,000 loans may be categorised as high-value loans with credit unions and those have interest rates around 7% monthly with repayment periods up to 10 years with some Credit Unions. 

    Community Development Finance Institutions (CDFIs) 

    CDFIs focus mainly on local investment for business loans with some being government-backed. With a poor credit history, mainstream lenders are hesitant to invest in new start-ups. Enterprise groups plug that gap by providing business loans, usually to support growth in local communities by facilitating new employment opportunities. In 2019, there were 50 CDFI’s operating in communities with 9 providing consumer finance. The rest were providing loans for business funding. 

    Guarantor Loans 

    Guarantor loans are popular choices for those with bad credit. Research shows the vast majority of people taking out guarantor loans ask their parents to help. A few will ask a friend, and very few ask a co-worker or colleague. Companies offering guarantor loans usually require the co-signer to be over 21 years of age, and preferably, be a homeowner. 

    Important Considerations

    Interest Rates: When comparing loans, focus on the APR (annual percentage rate) of the loan. This is the amount of interest that will be applied by the lender. As it is based on the annual rate, divide it by 12 and that’s the interest you’ll be paying monthly. The longer the repayment term, the higher the total the cost of the loan will be. 

    Repayment Terms and Early Settlement Fees: Given the higher cost of credit, it’s important to know what the lender will charge if you choose to settle the loan early, by perhaps refinancing using a loan with a better rate. There can be a penalty incurred for settling the loan in full early. Before you do, you can ask the lender for a settlement figure. They’ll then recalculate the interest and provide you with a total amount payable to settle the loan. 
    Credit Score Impact: It’s common to have loans refused because of bad credit. If a hard check was performed, that will be visible to lenders checking your file in the future. Applying for multiple loans in quick succession lowers your credit score more. Good practice is to space applications out, leaving 3 to 6 months between applications. During that time, focus on building good credit, and better budgeting in preparation for applying with a different lender later.