Credit card loans refer to the general use of a credit card. By their very nature, credit cards are a form of borrowing and as such can be counted as a type of loan.
The use of credit cards today is becoming more and more widespread. They can be used to purchase goods and services, pay bills, obtain cash advances or for consolidating debt - effectively buying now and paying later. However, whilst they are a convenient method of spreading your costs, it is important not to get behind with your payments. On using a credit card you will be required to pay at least the minimum amount outstanding each month, otherwise you may incur additional interest charges and debt on a credit card will have a negative impact on your credit score rating. If you choose to pay just the minimum amount and not the statement in full, you incur interest charges on the outstanding balance and the value of your debt will increase.
Application for a credit card is fairly easy - you can apply through most banks, some building societies, specialist credit card providers and many high street shops. Getting a credit card is difficult if you have a poor credit score rating and consequently the interest charged on the card will be higher.
While we accept that credit cards do have benefits, we would suggest that they are not good for loaning large amounts of money. Paying for the odd Christmas present or shopping bill is one thing, but using it for more serious payments can spiral out of control. If you require quick access to cash, why not choose a secured loan? Borro offer a service whereby money can be loaned against a number of valued assets. To find out more about turning your assets into short-term loans, see our Luxury Asset Loans page.
Even with a poor credit history, it is not impossible to find a credit card or unsecured loan. Simply searching for ‘credit card bad credit score' into a search engine will come up with a whole host of insightful results. Indeed, comparison websites such as Money Supermarket have pages dedicated to credit cards with bad financial history like this one. In fact, the foot of that page contains a great explanation of why credit score has such a bearing on APR rates as well as the best options for you.
However, if you do have bad credit you are going to miss out on the best offers. In that case, why not move the goalposts and consider another form of loan? The answer to ‘What Are the Alternatives to Credit Cards' droplink will give you more information on this, but in a nutshell, you have a wealth of options available from unsecured loans, to invoice factoring as well as bridging loans and secured loans.
As has been covered in the previous answer to ‘Are there Loans for Bad Credit?' droplink, getting the best rate will depend on your credit score. The better the score, the better the rate. These are always changing and one rate available at the time of writing this post, may well be gone tomorrow. Therefore, the best advice we can give is to check out a comparison site such as Money Supermarket or Go Compare. At Borro, we like to keep up-to-date with current trends and offers and for general knowhow and easy to digest information, you can't go wrong with Money Saving Expert, which has a great little feature under ‘picking the right card' to help you get the best deals for you.
However, bear in mind that if you do not think you will be organised and mindful enough of your credit card spending, you may be better of with a one-off short term loan which you can use to settle your finances. Borro offer a great selection of loans against valuables - this allows you to unlock some of their value, while not having to sell them. For more on what we can offer, see our How it Works page.
If you are looking to get out of debt, credit cards are a viable option for stemming the flow and spreading your payments. At the same time, heavy reliance on credit cards will lead you to spend money you don't have, and consequently leave you further in the red than you were to begin with.
Consolidating your debt might be easier with a one-off loan, giving you the time to assess and improve your finances. Here are a few of the options open to you:
Do you have any valuable assets that you could feasibly do without for a short time? Did you know that you can extract the value of these items without the need to sell? Secured loans are a great alternative to credit cards as they are calculated solely against assets and as such your credit history is of no relevance whatsoever. Borro offer loans against a wide range of items, from watches, to gold, fine wines and even luxury cars. To find out more about us, see our How it Works page or get in contact with one of our skilled advisors on 0800 056 1000
If you can't think of anything that you would be happy to part with for a short-term period, there is always the option of going for an unsecured loan. These are measured against your personal finance and credit history. If this is positive, then you may find you can loan large sums of money for reasonable rates. As with credit cards, poor credit scores will reflect poor rates, and bear in mind you will be tied into a loan agreement for significantly longer than a secured loan. For more on the advantages and disadvantages of this loan type, see our page Unsecured Loans.
A logbook loan requires you to hand in your license and insurance documents in return for a loan sum. This does have its advantages, the obvious one being that you retain use of your vehicle. For this reason it is also very discreet - no one would know you had taken out a loan. Having said that, rates can be extortionate - up to and above 300% APR. If you could possibly consider parting from your vehicle for a short period of time, you do have another option in taking out a secured loan. Borro offer loans against luxury, vintage and performance cars and boast some excellent storage facilities. To gauge what you might raise from loaning your vehicle, see our Value of Cars page.
Invoice factoring, bridging loans & consignment loans
Having a lack of funds can often be down to poor cash-flow. The loan types in this section are tailored towards those who expect to receive money in the medium/long-term, but in the meantime need a short-term financial boost.
To begin, invoice factoring is a handy way to assist with cash-flow issues. Here, a factoring company will manage your invoicing and accounts for you, covering the gap between when you have completed the work, but are waiting to be paid.
In a similar fashion, consignment loans give you cash against the value of an item that you have put up for auction, but has not yet been sold. As well as secured loans, Borro can also arrange a consignment loan - and while the majority of consignment loaners, such as Sotheby's, offer 40% of the reserve price, Borro's consignment loans can offer up to 70% of the reserve price.
Finally, bridging loans literally ‘bridge the gap' between buying a new property, while waiting for the sale of the old property to go through. Because this loan-type focusses on housing and commercial property, this has traditionally been the only way of getting hold of large sums of cash. However, Borro now offer up to £2,000,000 against assets so it might be worth considering that an option too.
If, having read all the information above, you would like to go for a secured loan (or consignment loan for that matter) Borro are on hand to give you expert advice. Click here to see our guide to finding the value of your assets or call us on 0800 056 1000.