Bad credit loans are an umbrella term. A loan aimed at bad credit borrowers is known as a bad credit loan. Whether you are taking out a personal loan or a payday loan, they both will come under the category of a bad credit loan if you are applying for them with a poor credit history.
Just because you can apply for a quick loan despite a less-than-stellar credit score, you conclude that bad credit loans and quick loans are the same, but it is not so.
What are bad credit loans?
A bad credit loan is a sum of money that direct lenders lend to help you financially when you are in the red. Banks and traditional financial institutions refuse to lend money to those who fail to maintain a credit score up to snuff, but direct lenders help subprime borrowers.
What are quick loans?
A quick loan is the amount of money that you can access this instant when you need a quick injection of cash. Quick cash loans are aimed at helping subprime borrowers during financial emergencies. These are very small loans.
What is the difference between bad credit loans and quick loans?
Bad credit loans and quick loans are the same, to some extent. They both are used to tick over unless you get back on the saddle.
Direct lenders can give you as little as €100. Mainstream lenders do not end such a paltry sum. They are more known for providing personal loans. However, the maximum sum online lenders can offer is up to €1,000, depending on the policy of the lender. A cap of €700.
Though quick loans are also a part of bad credit loans, they are not absolutely the same.
The following table will give you a quick idea of how these two loans are different from each other.
|Quick loans||Bad credit loans|
|Purpose||Only emergencies like a car repair||For both emergencies and planned expenses|
|Repayment length||Not more than a month||It could be longer than a year|
|Borrowing amount||Up to €1,000||Starts from €1,000 in most cases|
|Credit check||Soft credit check||Hard credit check|
|Credit score improvement||No||Yes|
Here is how these two loans differ from each other in detail:
- The purpose
Quick loans in Ireland provide you with funds instantly. When you bump into an emergency situation, you may need to borrow due to little or no rainy-day funds. As an emergency will not wait for you to arrange money, you must take out a loan. Quick loans will let you get funds at once.
After providing your personal and financial details, a lender will quickly analyze your affordability. If a lender finds you can repay the debt, you will be given the green light.
Like quick loans, bad credit loans in Ireland can help provide you with financial support during emergencies, but they are also used for planned expenses. For instance, you can use any of these two loans when your boiler needs a repair.
It does not matter much. In fact, you can take out a payday loan as well. However, if you need money for a vacation, home refurbishment, wedding, and honeymoon, you will have to apply for bad credit loans. Quick loans are too small that they cannot serve you.
- The repayment length
As you get a small sum after applying for quick loans, you will not have a longer time to repay the debt. A lender will require you to pay it in full once and for all, probably on the next payday. It is not feasible to spread the cost of such a small loan size. Even if you borrow €1,000, your lender will ask you to pay it in a lump sum or weekly instalments.
The repayment term for poor credit loans varies by the amount you borrow. If you borrow a smaller sum, for instance, up to €1,000, you will pay it off in a lump sum or weekly instalments. But the cost can be spread over if you borrow more than that. You will pay down the debt in monthly instalments.
- The borrowing amount
Quick loans are small emergency loans so that you can borrow between €100 and €1,000. However, not all lenders are bound to follow this lending range. The minimum borrowing amount for some lenders is €200 or €300 and is capped at €700 or €750.
Bad credit loans start from €1,000, and the maximum amount can be up to €15,000, depending on the policy of a lender. While some lenders do not lend more than €5,000, others offer up €10,000.
- Credit check
A credit check is a must, regardless of the size of the loan. Your credit score gives an idea to a lender about your affordability. You do not have to undergo a hard credit check with quick loans. It means a lender can lend you money after running soft credit inquiries that do not leave footprints on your credit report.
However, bad credit loans come with a hard credit check. No lender is permitted to sign off without peering into your credit file. If anybody does so, you should beware of them. You will have to face dire consequences otherwise.
- Credit score improvement
Loans can help to do up your credit score. Quick loans are very small loans repaid in full on the due date, so they do not provide sufficient information about your attitude towards financial obligations. A missed payment or a default can knock down your credit points, but on-time payments will contribute nothing.
But bad credit loans can help improve your credit report, provided you are to pay down over the course of time. On-time payments will show you to advantage, and this will help you borrow money at attractive interest rates.
The final comment: Bad credit loans and quick loans have some similarities, but both loans are not the same. They are ideal for different types of needs. If you want to use these loans, make sure you borrow from reliable money lenders in Ireland.