Credit Building > Can you get a long term unsecured loan with bad credit?

Can you get a long term unsecured loan with bad credit?

Wollit Team3 minute read · Updated 4th July 2024

In the UK, getting a long-term unsecured loan with bad credit can be hard, but it is not impossible. In fact, quite a number of lenders offer such loans.

Let’s look at the ones who do, what their requirements are, and what other options are there.

What are long term unsecured loans?

Long-term unsecured loans are personal loans that are not secured by any collateral, meaning they’re not backed by things like your home or your car. If you don't repay the loan the blender cannot simply take your home or car, like they would for a secured loan. However, they can send bailiffs or take you to court.

A long-term unsecured loan is also different from a personal loan which has a shorter repayment period. Most personal loans are meant to be repaid within one to two years. However, long-term unsecured loans are meant to be repaid for over a longer period of time, usually between 18 months to 5 years.

Also, while short term personal loans are used for covering short term expenses (like a trip abroad or buying a new laptop), long-term unsecured loans are often used for larger purchases, debt consolidation, or home improvements.

Which lenders offer long term unsecured loans to people with bad credit?

The vast majority of personal loans that accept applicants with bad credit usually tend to offer very short repayment windows. You’ll often see “bad credit loans” mention that you’ll need to repay them within a few months.

This isn’t always a bad thing. Bad credit loans tend to have very high interest rates, often over 100% per year. This means that if you take a personal loan with a high interest rate for a longer period of time, you'll have to pay quite a bit back in interest charges.

However, if you really do need a longer-term unsecured loan, some lenders in the UK do offer them:

Everyday Loans: Everyday Loans offers unsecured loans up to £15,000 with repayment terms ranging from 18 months to 5 years. While the application is online, they also require a face-to-face meeting to assess your financial situation.
Cashfloat: While mostly providing short-term loans, Cashfloat can offer up to £1,500 for a term of up to 12 months, still longer than most bad credit loans.
Norwich Trust: Norwich Trust offers bad credit loans with some of the longest repayment periods we’ve seen. Their loans under £9,000 can be repaid over 3 to 5 years, while loans up to £15,000 can be repaid over 8 years.

What are the interest rates for long-term unsecured loans for bad credit?

Long-term unsecured loans available to people with bad credit often come with higher interest rates compared to those available to people with good credit scores. This is probably not a surprise.

What might be surprising is just how high these interest rates and fees can go:

Everyday Loans: 71% to 300% APR.
Cashfloat: 296% to 1294%.
Norwich Trust: 31.9% APR.

One thing that might not be obvious: these APRs are “representative”, meaning that’s what more than half of their customers see. If your credit score is particularly bad, you might have to pay even more.

What else do I need to think about when applying for an unsecured long-term bad credit loan?

A bad credit loan generally is a very expensive way to borrow money. getting one without providing any collateral and for the long term can make some of it risks even worse:

Loans for bad credit often come with higher interest rates, which can increase the overall cost of the loan.
Longer repayment periods can result in higher total interest paid over the life of the loan.
This can make missed payments and debt problems more likely, which can lower your credit score even more.

This is why first you should try some alternative options instead, like guarantor loans, loans for people on benefits, or even a secured loan if you have any collateral of value at all. Asking friends and family for help should be an option, too.

However, the best thing you can do is to keep working on your credit history and try to improve your credit score.

The good news is that there are many apps that can help you build and improve credit.

One such app is Wollit. Wollit is an app available both on Android and iOS, and it works by reporting a fixed-fee monthly subscription as a loan repayment to all three credit reference agencies (Experian, Equifax, and TransUnion).

This builds your credit history, helps you improve your credit score, and eventually increases your approval chances for better and cheaper personal loans.