When circumstances force you to take up a loan from traditional lenders, particularly long term loans, you are typically required to provide a guarantor who accords the lender security of loan repayment. However, modern-day lenders recognise that not all people have guarantors and not all people are willing to disclose their financial problems to other people. As a matter of fact, it is very difficult to find a person who is willing to be your guarantor. This creates a market gap for borrowers who have the ability to repay loans, but who do not have a guarantor. As such, there are lenders who now offer long term loans no guarantor to cater to these people who do not want to involve a guarantor by circumstance or choice.
Loans taken without a guarantor are regarded as unsecured and lenders tend to charge more in interest rates. This is because they have limited assurance of the finances they lend out getting paid back. These lenders are taking on additional risk hence the higher interest rates. Even if you have bad credit, it is still possible to get no guarantor loans but with much higher interest rates to account for the additional risk the lender is accepting. It is even more expensive when you have to take the loan for a long period. While you will be paying fewer amounts each month, as compared to a loan of a similar amount taken and repaid over a short time, your overall interest in the long term will be more.
What You Need to Know When Taking Long Term Loans No Guarantor in the UK
It is often difficult to find someone to co-sign your long term loan especially when your credit score is poor. The commitment might be great on their side meaning that they will be under obligation to pay when you fail to fulfil your end of the bargain. Guarantors also tend to risk their credit scores which make numerous people avoid such a role. At other times, finding a person with a great credit rating is difficult. When you have such individuals that are willing to co-sign, the process may take time to put together all the essential documents or details needed. You may nonetheless find yourself in need of the loan and without a guarantor, it is important to know how to evaluate your options. Here are some few pointers;
Can you afford the repayments?
Taking a long term loan without a guarantor is normally a huge commitment that requires you to be financially sound throughout the repayment period. Ensure you have a constant source of funds especially through a salary or constant business income that will enable you to consistently repay the loan. You should calculate the amount that you have to repay every month and be sure that you can afford it effortlessly. This will ensure that you do not get unnecessarily strained after a few repayment cycles.
Bad debt is a vicious cycle when repayment is difficult because you will have to take on another loan to repay the initial one. Your credit scores will worsen with increasing interest rates and your difficulty of making repayments will increase gradually until you run out of options. To prevent such a scenario, only borrow the amount you can afford to repay especially in fixed instalments without having to take out another loan.
What terms and conditions are associated with the no guarantor loan?
Some of the indications of great lenders are the terms and conditions they give for their loans. Unfortunately, as reported by the Guardian, most people have a habit of not reading or just scheming through the terms and conditions which can be very costly. A majority of them require you to be of legal age, have permanent UK residency, and also a source of regular income. The lenders who check your credit ratings are ideal because they show a degree of concern. Avoid getting trapped by lenders who look to take advantage of your financial difficulties. They make it easier for you to get the loan for you to default and as such take more debts that are financially advantageous to them.
How much do you need to borrow?
It is always recommended to borrow only the amount that you need. Always refuse the temptation to take out an excessive loan that you have not budgeted for. You may be needed to cover the extra repayment that you never budgeted for using another loan hence getting trapped in a vicious debt cycle.
Do you really need the loan? Are there any other ways to get the funds you need?
You should consider long term loans no guarantor lastly when you have run out of options. If you can manage to sort out your financial woes in other methods rather than going into debt it is advisable to do so. Options, like taking a second job or minimizing expenses, are ideal if you can manage to rather than getting yourself trapped in debt.
Is the lender reputable and are their rates frank?
Good lenders do exist just as bad ones also do exist. This means that it is your duty to determine whether the lender you choose is superb. You should aim to get a reputable lender and avoid loan-sharks who seek to exploit your financial woes. Such bad lenders give you all the money you may need even without questions and later on hike the interest rates. Since you have no option, you are left with huge repayment sums and even easily get trapped into more debt. This means that honesty in the interest rates is important for you to determine your affordability of the loan. Look out for and select the loans that have lower interest rates or the rates that are fixed.
Get expert and reliable assistance
The above information will help you to decide on favourable long term loans no guarantor in the UK. With numerous lenders of this type, you only need to fill an online form and get the funds you need swiftly. You should, however, get the right advice especially on reputable lenders and the options you have. Bonsai finance helps you to access such loans and gives you advice on the best deals that you should accept. It makes a huge difference when you have reliable advice. Get in touch with us today to learn how we can help you to access numerous loan options to suit your needs.