What are the chances of finding approval for loans for bad credit without guarantor? This question comes to the minds of many people with poor credit ratings who need a loan. Guarantor loans may be a suitable choice of loan for anyone with bad credit as lenders are more likely to offer loans with a guarantor being present. However, this type of loan is not suitable for all circumstances. So what are the alternative options?
There Are Several Options for Loans
You will be pleased to know that there are several options open to you and guarantor loans are not the only type of loan out there.
So which type of loan might be better suited to your needs? Ask yourself the following:
- How much money do I need to borrow?
- How long do I need to repay the loan?
- What is the state of my credit rating?
- Can I afford the loan?
- Do I meet the general criteria for borrowing?
These are all questions you need to answer before you even start looking for a loan. Answering these questions will also help to determine which of the loans might be a more suitable option.
How Much Money Do You Need to Borrow
How much money you need to borrow will depend on the type of loan you apply for as each loan offers up to a limit.
With bad credit, you may struggle to find a personal loan. Personal loans generally offer up to £5,000 and you can spread the cost of the loan out over years. If you require a large loan, you might have no other option but to consider a guarantor loan or a secured loan.
A secured loan may allow you to borrow a larger sum of money with a poor credit rating and you do not need a guarantor standing by your side. However, you do have to put something as security up against the amount of money you want to borrow. If you cannot repay the loan, you are at risk of losing whatever you secured.
Borrowing Smaller Amounts with Loans for Bad Credit without Guarantor
There are options if you only need a small amount of money and your chances of being approved for a loan may improve, as lenders are more likely to offer smaller sums than large ones.
Payday and short-term loans are two types of loan to consider for smaller amounts that can be repaid back quickly.
With a payday loan, you might be able to borrow between £100 and £500 and with a short-term loan; you could be able to borrow up to £1,000.
How Long Do You Need to Repay the Loan
Another consideration when thinking about applying for a loan is how long you need to repay the money.
If you only want a small amount of money, you could apply for a payday loan and repay the loan in as little as one payday (one month). This clears off the loan and any interest within one payment. If you need more time, you could spread the loan out over three paydays. You will be paying more interest on the loan, which also means the loan is going to cost you more in total. However, it does make the loan more affordable on your payday.
With a short-term loan, you do have longer to repay the loan but it is still not a loan taken out for the long term. Lenders may allow you to spread the cost of borrowing for up to 12 months, which can make the loan more affordable with monthly repayments.
As you might expect you are going to have to pay more out to borrow over a 12-month period than you would if you halved it and paid it over 6 months. How much you pay in interest will be down to the APR on the loan. When looking for a loan and comparing choose the lowest APR. You do have to bear in mind that with a poor credit rating you cannot expect to get the best APR, lenders reserve this for those with good credit ratings.
With personal or secured loans, lenders generally offer you loans spread out over many years.
Check Your Own Credit Rating
Before applying for a loan, it can pay to check your own credit rating. By doing so you can make sure everything on it is correct, as it has been known for mistakes to be made.
If there are errors on your credit file, you can contact the lender to have the error removed.
By checking your own credit file, you will have an idea what the lender sees.
Before you apply for any loan, it is important to make sure it is affordable. Sit down and work out your finances so you know exactly how much spare money you have each month.
Lenders will also make an affordability check when you make an application. All ethical lenders on the panel of lenders we work alongside will consider verifiable income along with your credit rating.
Do You Qualify To Apply for A Loan?
You also have to ensure that you are not going to waste your time by checking you are eligible to apply for a loan in the first place.
All lenders will ask that you:
- Are over 18 years old;
- Have a regular monthly or weekly income;
- Have a bank account in the UK;
- Have a debit card attached to the account.
If you are eligible and want to apply for a loan, we can help to match you with a panel of lenders from the UK. The lenders on our panel all consider verifiable income along with your credit rating, so you have a chance of being approved even with a poor credit rating.
You can make a single application for loans for bad credit without guarantor with our help to access multiple lenders and not have your credit rating affected. You will get an instant decision from lenders offering competitive interest rates.