It may be easier to obtain a loan with a guarantor if you have a bad credit rating. However, there are other loan options even if your credit rating is less than perfect. So what options are out there for bad credit loans without guarantor?
Small Loans Are the Most Popular
People with poor credit ratings stand more chance of getting approval for a loan that does not need a guarantor when applying for small loans.
A loan is generally classed as a small one if it is in the region of £100 to £1,000. However, the amount you may be able to borrow is going to depend on several factors. These include:
- Your credit rating;
- Loan affordability;
- Your monthly income and outgoings;
- How long you want to spread the loan over;
- The lender.
Small loans are split into two different categories, the payday loan and short-term loan. Both of the loans are easy to apply for online even with a poor credit score and are generally easier to find approval for than a personal loan.
Why Are Small Bad Credit Loans without Guarantor Easier to Get?
One thing that puts lenders off from lending you money is the fact that you have a bad credit rating.
All lenders in the UK will consider your credit rating before approving or denying a loan, there is no getting away from this. However, with smaller loans, they tend not to look too deeply into your credit history.
With smaller loans, the sums of money involved are low, which means the lender is not taking the same risk as if they were to offer thousands of pounds. This is usually why some lenders are willing to take the risk.
When applying for a small loan the loan is repaid faster than personal loans, again another factor in favour. Lenders will consider your verifiable income and calculate whether the loan is affordable.
Payday or Short-term Loans, Which Is More Suitable?
Both the payday and short loans can be applied for without a guarantor and you do not need to secure anything against the loans.
There are some major differences to both the loans even though both offer small cash amounts and are repaid back quickly.
Payday Borrowing For One to Three Months
The payday loan is a popular type of bad credit loans without guarantor needed in the UK for people with poor credit ratings who only need to borrow a small sum of money.
The loan generally offers between £100 and £500. Loans of this nature are sometimes called same day loans, emergency loans or fast loans as they are quick to apply for and payout of the funds is generally fast. In many cases, funds are paid into the bank on the same day, often within hours of applying.
Borrow Between One to Three Months
Payday loans have their name for a reason. The loan is repaid on your next payday. This can be either be in full, including the interest the loan accumulated to that day or it can be spread out for up to three months.
With interest on the payday loan being added on daily, the longer the loan is taken over the more you pay in interest, so this needs to be considered when applying for the loan.
Payday loans can work as intended if you know you can repay it as agreed. However, they can be an expensive way of borrowing if you have to roll the loan over as you find you cannot meet the repayments.
Payday Loans for Unexpected Financial Outlays
Loans of small sums of money can come in very handy to provide a helping hand due to any unexpected financial outlay that you have not budgeted for, which crops up before your next payday.
Payday loans can be used to provide funds for an unexpected bill that requires paying before your next payday comes around or for emergency repairs to a vehicle, household appliance or the home.
Short-term Loans For Up To 12 Months
Lenders offer short-term loans usually for sums of up to £1,000. This is another type of loan that is paid back over the short-term, which means you are not committed to a lengthy loan.
Spread the Cost of Borrowing Over 12 Months
With a short-term loan, lenders will generally allow you to spread the repayments for up to 12 months. This is going to depend on the lender, some perhaps offering a longer-term or some less.
Loans of this nature have been popular among families on Universal Credit during the summer holidays in the UK to pay for childcare.
On average parents had to find an additional £800 throughout the six-week holiday for the funding of care with either childminders or holiday clubs. Many people do not have this money, so they turn to short-term loans.
There is a loan called a personal loan but this type of loan is generally more difficult to find approval for as the loan generally offers up to £5,000.
With personal loans, the repayments can usually be spread out for up 12 months.
Due to this, it may not be a suitable loan for anyone with a very poor credit rating as lenders generally look more deeply into your credit history than they do if you apply for a smaller loan such as the payday or short-term loan.
On saying this, the lenders we work alongside will consider verifiable income when deciding whether to approve a loan, along with checking your credit file.
Simple Online Loan Application
Applying for a loan online is simple. All you have to do is:
- Be over 18;
- Have a regular income;
- You can afford the loan;
- Live in the UK;
- Have a UK bank account and debit card.
We can help to find you a lender willing to offer bad credit loans without guarantor as we work alongside a huge panel of lenders. Lenders offer affordable loan options with some of the best rates possible and they will consider verifiable income along with your credit past.