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With the number of specialist credit products on offer nowadays, one thing is certain: the UK borrowing market is as healthy as ever

Banking sectors are undergoing radical changes in the current post-recession climate; while in the US the Obama administration battles for fresh rules to the financial system, in the United Kingdom major changes are also afoot under the new coalition government. A number of borrowing products that were easily accessible before the country fell into its deepest recession since the 1930s have now been eliminated from the market; customers that were welcome at the mainstream bank are now rejected. However now, a new variety of self-contained firms are advertising financial products on the net. These include a significant selection of credit cards, specialist loans and investment portals. These merchants offer an alternative to borrowers who have experienced the new, tougher banking method. Loans for bad credit are but one of the many specialist loans which are offered by loan merchants that promote via the internet. As their name suggests, they are created for people who already hold a bad credit rating. But what exactly does a bad credit loan offer to customers who are not accepted by traditional banks – and are they really safe?

Critics are divided. On one side of the fence are those who argue that loans which are specifically created for people who are already labelled as unacceptable by high street banks shouldn’t be on offer at all. A loan for bad credit could, it is argued, provide a consumer with increased risk of falling into further debt. As such it could be a dangerous drawback for an economy which is still not recovered. After all, were not easy-access loans a significant element of Britain’s decline into fiscal hardship? On the other side of the fence are those who reason that without bad credit loans, a higher proportion of people would land in severe financial difficulty. In addition it is argued that not all hopeful borrowers are running into a nominal debt hole. A bad credit rating can be gained simply by being a new entrant to the UK or having committed one credit mistake in the past.

Whichever argument is correct there are means of benefiting from bad credit loans. Loans for bad credit are much lower in risk than, for instance, payday loans. They are only offered with an APR rate which is decided from a person’s personal credit score. In other words, the APR rate is a balance of a personal circumstance. A key factor of bad credit loans, which numerous critics view as beneficial, are features such as ‘credit builders’. This is a service which gives the borrower the chance to rebuild their future credit score provided they are responsible with repayments on the current loan.

Taking into account the number of independent credit products on offer at the moment, one thing is clear: the British loan market is as booming as it has ever been and is still appealing to customers who are keen to find a substitute to traditional banks.

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