The Different Types of Bad Credit Insurances

Bad credit insurances are a good option for people who may find it difficult to get financing because they have run into payment arrears in the past, have had CCJs or have defaulted. There are a number of bad credit insurance lenders now offering this type of financing but the financial terminology used to describe borrowing specifically for this market segment may confuse you.

Some of the terms referring to borrowing targeting this market segment are: bad credit insurances without credit check and bad credit insurances with instant decision. The first option is a useful one because it means that you don’t have to worry about being rejected due to past financial difficulties. The latter also often indicates that rigorous checks are unlikely.

Another type of borrowing you may see advertised is bad credit insurances with no fees. With this type of financing, the borrower still has to pay interest on the amount borrowed. However, there will be no set-up fees or additional fees charged such as administrative fees. Therefore, these can often be useful.

In describing the different types of products on offer, we’ll start by looking at unsecured bad credit insurances. If you don’t want to insure your property for the amount you borrowed, unsecured bad credit insurances are a good option. However, the interest charged on them tends to be higher than that charged on secured forms of borrowing.

Among the types of unsecured bad credit insurances are those that require a guarantor. In this case, the guarantor is usually a trusted family member or friend who is guaranteed to take over the payments on your behalf if you fail to meet them. A guarantor is usually required for people who have not had the opportunity to establish a credit history, for example, parents often act as a guarantor for their adult children.

Another type of unsecured financing is when the payments are collected from the home. These are known as home collection insurances. The amount awarded is usually low (generally between £100 and £500). A representative from the lending company calls the house on a regular basis to collect payments, which is usually once a week or once every two weeks, and there are also different types of secured financing available for people with bad credit history. Borrowing can be secured against a house, car, or other property. In addition, payday insurances depend on the borrower having a regular income and the amount granted is repaid once the borrower’s salary is paid into his account.

Even visiting mortgage brokers is a form of secured financing. The borrower takes his merchandise to the mortgagee who lends him an amount of money based on the perceived value of the merchandise. Then the person returns at some future time and pays the amount of money with interest for his merchandise, which was a guarantee against the amount of money borrowed.