> Non Status Loan - UK Guide
In a nutshell
A loan designed to help consumers with a 'non status' credit rating.
Best Loan for
Anybody that is classified as non status. This can include people with credit problems, those that can't prove their income and people with erratic incomes such as the self employed, freelancers and contract workers.
The amount you can borrow will depend on your lender, how much you intend to borrow and, ultimately, on the loan type you choose. Some non status lenders will allow self certification which allows you to state your own income without proof. If you have credit problems then your allowed borrowing may also take your existing debts into account.
Loan terms vary between 1-25 years depending on how much you borrow, who you borrow it from and how you borrow it.
A non status loan simply allows people with credit problems or those that cannot easily prove their income to get a loan when they need to borrow money. Being classified as non status will make it hard to qualify for a loan from a mainstream lender or you may be charged higher interest rates - as a non status loan is specifically designed for this purpose then you won't have any such issues. You can use a non status loan for a few years as a way of boosting your credit rating - you may then earn the necessary status to take out a standard loan product.
What to look out for
A non status loan will be more expensive than a standard product as it will come with higher interest rates attached. This minimises lender risk but means you'll have to pay more to raise the money you need. You'll find that the same interest rates won't apply to everyone here - the worse your situation, the higher they will potentially be. If you do have financial problems then you need to be extra sure here that you can afford your repayments - you don't want to make your situation even worse by defaulting on payments. That kind of thing will all go on your credit score. And, many non status lenders prefer to lend to homeowners - so you'll have to use your house to get the loan you need. This is not a problem - as long as you keep making your repayments. Stop them, however, and you risk losing your home and/or possessions. Payment protection insurance can help here - but it'll add to your costs both on a monthly basis and in your overall total repayment. You may also find that you are given little flexibility with this type of loan. For example, you may be charged a penalty if you try to repay your loan early, you probably won't get payment holidays and you may not be able to overpay if you have extra cash to hand.
If you don't qualify with the right status, then there is no real alternative to a non status loan.