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Home » Low Interest Loans

How To Score Low Interest Loans With A Bad Credit

Loans are one of the most reliable options you have when running out of cash. It’s undeniable how it can relive your monetary dilemma in the soonest possible time – and not to mention, easiest way. Although an advance is beneficial, it can turn the other way around if the borrower miscalculated his repayment capability. After all, you’re not only dealing with the principal rate; you also need to settle the interest and other fees. Therefore, getting a loan is an expensive choice.

To compensate for this, some loan seekers apply for low interest loans. These loans are easier to manage despite the interest because it’s more affordable. As the name suggests, the advance has a lower interest rate and minimal fees. However, not all borrowers are entitled to this loan, unless you have an excellent credit rating. If you have a bad credit remark, you may either get rejected or have a loan with an exorbitant interest and other charges.

The credit score is a crucial factor used by banks and conventional loan providers, and a damaged credit report implies that you have created financial mistakes. Therefore, to ensure that you’re a low risk to the company, the lender only consider your application if you have a good credit remark. Less risk equates to lower interest loans.

But does that mean that bad credit borrowers will never find a loan that is affordable?

The answer is – no. There are still ways on how you can acquire low interest loans despite committing arrears, defaults, late payments, and the like, and here are some of your options:

  • Taking Short-Term Loans

Most people think that a long-term loan helps them settle the debt efficiently; however, the shorter the repayment term, the lower the interest rate charged. Therefore, choose a loan option that can be settled in less than a year to avoid staggering interest rates.

  • Find Loans With Lower Fees

Aside from interest, an advance comes with other charges such as upfront fees, early repayment, late payments, etc. Find a lender who will offer minimal charges, or won’t apply other fees at all. For instance, if you think that you can settle the loan in advance, find a loan provider who will not apply a charge for early repayment.

  • Read The Fine Print

Most borrowers are lazy enough to read the entire contract, and this can be harmful as not all lenders are willing to explain their terms and conditions one by one. As a result, you might miss some very imperative details and worse, you might end up paying for hidden charges.

  • Evaluate The Lender

Before getting a loan, conduct a background check first. Some “cheap loans” are falsely advertised to attract borrowers. Meanwhile, there are scammers pretending to be real lenders and rather than getting financial assistance, they may acquire money from you without your knowledge.

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Tips To Get Low Interest Loans

  • First, find out if you can afford the loan; remember, you’re not only settling the principal rate, you also have to deal with the interest and other fees. Most borrowers are either too excited or desperate enough to review the loan and as a result, it’s too late to realize that their income is not enough to cover it. Therefore, no matter what financial situation you are in, focus only on the amount you need and can afford. Also, be sure to use the loan as a last resort and only when it’s really necessary.
  • Assess your capacity to settle the loan, even after you lose your only source of income. For instance, your company shut down and you have no job for three months – can you still settle it?
  • Find out as much as you can about the interest rate and other charges involved with various lenders to know which offers the best deal. Shopping and comparing may be an exhausting task but it can save you a lot of money.

Personal Loans With Bad Credit

As mentioned, only those who have an excellent credit rating can avail an advance; however, that is not the case these days. There are loan options available when you are in dire need of cash but your credit report is unpleasant. Here are some of the loan alternatives you can choose from – some of which are low interest loans that can help save a reasonable amount.

Fast Access Payday Loans

Payday loans are a popular choice for both employed and unemployed borrowers. As long as you can provide a source of income or an alternative fund, your chance of getting approved is high. It’s also convenient and fast to acquire. In just one day or an hour, the money can be transferred to your account. However, it offers only a modest amount which is barely enough to cover a month-worth of expenses.  Also, the interest rate it carries is extremely high, thus not a good option when looking for low interest loans.

Peer-To-Peer (P2P) Lending

Peer-to-peer lending – or P2P for short – have been in the market since 2005 and it’s one of the most innovative loans online. Like other loans, it is easy to obtain but it also comes with its own set of cons. Unlike online loans owned by private lenders, there are only two individuals involved – the borrower and the investor. No credit check or collateral is required and all you have to do is post a request on its platform. It is beneficial to the borrower but can be quite risky to the lender since they have no other security against the loan offered.

Guarantor Loans

A cosigner or guarantor loans are one of the feasible options when you want low interest loans. Almost anyone, even those with a bad credit can send a loan application. It works by finding another person who will cosign and guarantee the loan contract. While the borrower is asked for minimal requirements, the guarantor needs to follow strict criteria such as an excellent credit rating, a high income, and sometimes, collateral. His primary role, aside from cosigning the contract, is to shoulder the loan in the event of default.


Representative Example:
305.9% APR. £400 borrowed for 90 days.
Total amount repayable is £561.92 in 3 monthly instalments of £187.31.
Interest charged is £161.92, interest rate 161.9% (variable)
Please note:
Loanovao is NOT a lender – we are a licensed broker working with the most popular direct lenders in the market to find you the most suitable short-term loan plan. Our FREE quoting service compares more than 40 lenders quickly and finds you a lender with the lowest rate that they are willing to lend to you today.
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