What are the alternatives to bad credit loans?

What are the alternatives to bad credit loans?
Stacey Corrin

bad credit loans alternatives

Short-term loans and payday loans are both forms of finance that consumers think of when considering bad credit loans alternatives. However, in actuality, there is a wide range of finance types that could be considered by those with a less than perfect credit history.

In the order of most to least similar, below is an overview of some potential bad credit loan alternatives that may be suitable for you and your circumstances.

Bad credit loans alternatives: short-term loans

A short-term loan typically runs over a period of between 1 and 6 months. The amount borrowed will be in the region of payday loans, although the repayments are spread over a longer period.

Bad credit loans alternatives: payday loans

A payday loan provides funding that can be thought of as an advance. They lend a relatively small amount usually ranging between £80 and £500 that is repaid around a month later in one instalment.

Bad credit loans alternatives: line of credit loan

A line of credit loan can be thought of as a flexible loan that you can access as and when you need to, in some ways similar to an overdraft. Interest is charged as soon as the money is borrowed and the balance is repaid over a set period of time

Guarantor loan

Guarantor loans require the borrower to have a friend or family member guarantee their loan. While they are thought of as a fast form of finance, the potential personal problems that could be caused should you default should be thoroughly considered.

Logbook loans

Logbook loans are a secured form of finance tied to the borrower’s vehicle, and as such the amount you are eligible to borrow reflects the value of your vehicle. This is a rare form of finance that requires no credit check, however, as with all forms of secured finance, you need to carefully consider how you’d cope should you fail to keep up with repayments.

Personal loans

Personal loans are subject to lower interest rates than all of the other forms of finance we’ve covered so far. They can also be taken over longer periods and offer a higher upper scale as to the amount that can be borrowed. However, the acceptance conditions are far more stringent. This means that for most consumers with bad credit, they simply won’t be accessible. If you think whether or not you should consider a personal loan over a payday loan, then this article is worth reading.

Homeowner loans

Homeowner loans can provide significant amounts of funds that are secured against your home. How much you’re eligible to borrow depends on the amount of equity in your home.

There are a number of issues with this form of finance. First, only 64% of consumers are homeowners, a figure that falls to 36% for those aged 25 to 34, making this form of credit unsuitable for the many who don’t own a property. Second, securing any debt against your home whether on top of a mortgage or mortgage-free property is a risk. Miss payments or encounter difficulties in paying and your home is at risk.

A visual comparison of bad credit loans

Type of finance

Average duration



Credit check?

Guarantor loan

12 months – 5 years

£500 – £10,000



Payday loan

1 month

£80 – £500



Short-term loan

1 to 6 months

£80 – £500



Logbook loan

12 months – 5 years

£250 – £50,000

Yes – secured against your car


Personal loan

12 months – 5 years

£1,000 – £25,000

Not normally

Yes – and they’re tougher to quality for

Homeowner loan

5 years – 25 years

£3,000 – £250,000

Yes – secured against your home


Should you apply with CashLady for a bad credit loan, you may also be offered:

  • Payday loans
  • 1-6 month short term loans
  • Line of credit
  • Guarantor loans

Understanding the many alternatives to short term bad credit loans can feel overwhelming. If you need assistance to understand your options you can contact the CashLady team using the email address below. We’re also contactable via our live chat feature, should you want to speak to someone instantly.

How does CashLady compare for bad credit loans?