A guarantor loan is one type of loan that people with poor credit ratings might stand a better chance of getting. However, this type of loan needs some careful thought and it is not suitable for everyone. Here we are going to look at how easy it might be to get loans for bad credit UK no guarantor needed.
What Is Bad Credit?
Let us get something straight and this is what bad credit is. You might hear the term but do you know what it actually means?
Lenders talk about good credit ratings and bad credit ratings. They will look into your credit file to determine whether you have good or bad credit based on what is in the file.
You might be determined to have bad credit if:
- You have Country Court Judgements on your file;
- You have been late with repayments on previous loans;
- You missed any repayments;
- Have a lot of outstanding credit;
- You have used a large percentage of the credit available to you.
What Are the Alternative Loans for Bad Credit UK No Guarantor?
Therefore, you have ruled out a guarantor loan for one reason or another and you are wondering what options are available for loans.
The types of loans that might be suitable will depend on the amount of money you want to borrow.
You do have to be reasonable when it comes to borrowing with a poor credit rating. It is going to be more difficult to find a lender willing to offer you a loan if you need to borrow thousands of pounds. It may also be difficult to find a lender willing to offer a loan spread out over many years if your credit rating is poor.
The easiest types of loans to find approval for with a poor credit rating are a payday or short-term loan.
Neither of the loans requires that you find a guarantor and neither needs something secured against the amount of money you want to borrow.
The benefits to a payday or short-term loan include:
- You may be able to borrow from £500 to £1,000;
- You might be able to repay the loan back from one month to 12 months;
- Lenders are more inclined to offer small loans to people with poor credit ratings;
- The loan application can be made entirely online without the need to wait for paperwork;
- It takes minutes to apply for a loan online;
- If you allow us to help match you with a lender we can search for a loan with multiple lenders and only one loan application is needed;
- You will not have to search yourself with multiple lenders and have the searches noted on your credit file;
- If approved funds are fast to be paid out which is great when met with a financial emergency.
What Does A Payday Loan Entail?
A Payday loan has many names; this includes a fast loan, same day loan and quick loan. They all boil down to the same thing, a loan that is fast to apply for and payout on the dame day and you repay it on your next payday or spread it over three paydays.
How Much Can I Borrow?
Payday loans do not offer huge sums of money and the amount you might be able to borrow is going to depend on the lender, your credit file and affordability.
All lenders will make an affordability check to find out if the loan is affordable. To do this they will want information about your income and outgoings. They can determine how much money you have left each month and this is money that could be used to pay off the loan. Of course, as the loan is only taken out for a maximum of three months and it is a small loan the risk to the lender is only small. This means even with a poor credit rating you be might be approved.
Lenders will generally offer between £100 and £500 with payday loans. This is classed as only a small amount of money to the lender.
Borrow For One to Three Months
Payday loans can be repaid on your next payday or you might want to spread out the loan for up to three paydays. Lenders assume you are paid on a monthly basis, so essentially it is a one to three-month loan.
You agree with the lender to repay the loan on your next pay date or spread it out evenly over three paydays.
When considering this bear in mind you do not want to leave yourself short of money on your next payday if you are repaying the loan in total with interest added. At the same time, the longer you take to repay the loan the more interest is added on, so the more the loan costs in total. It can pay to check out the cost of borrowing using a payday loan calculator to see how much interest you could save.
A Payday Loan Can Get You Out Of a Short-term Financial Mess
The payday loan is one of the most popular loans for bad credit UK no guarantor required if you come across a sticky financial situation.
For instance, your vehicle might break down and need towing to a garage for repairs. You know that if it had happened after your next payday you would have had money in the bank to cover the cost. However, payday is a week or so away and money is tight right now. In this case, you could borrow the money and repay it when you are paid. By doing so, you could even save money by not having to pay out for public transport in the meantime. At the same time, your life is not disrupted and you do not have the stress and strain of having to manage without your car until your next payday.
What Does a Short-term Loan Entail?
A short-term loan might be useful to meet an emergency payout when you need to get your hands on more than what is offered with a payday loan and you need to spread the repayments out over a longer-term.
How Much Can I Borrow With A Short-term Loan?
While the amount you might be able to borrow is going to depend on your personal circumstances, your credit rating, affordability and the lender, most lenders will offer up to £1,000 with short-term loans.
Again, the loan does not need a guarantor or anything secured against the loan and it is quick and easy to apply for online.
How Long Can I Take A Short-term Loan Over?
Most lenders will offer short-term loans for a period of up to 12 months. This may vary with lenders and again it could depend on your credit rating, the lender and loan affordability.
Twelve months is going to make the repayments of the loan more affordable each month but at the same time, it does make it a more expensive way to borrow. It can pay to sit down and work out your finances before applying for a loan to determine how much you can realistically afford to repay each month and choose the lowest term possible. The quicker you repay the loan the less it costs in interest and in total.
The APR on Bad Credit Loans
One thing to consider when looking for a short-term loan is the APR. APR stands for the annual percentage rate and this is the amount of interest added on over the year. The higher the APR the more the loan will cost in interest.
With the payday loan, interest is calculated daily. These loans are shown with a huge percentage rate in the thousands of percent but you do not pay that interest rate, as you are not repaying the loan over the year. As the loan interest is added daily, the quicker you repay the loan the less it costs.
Making Your Loan Application with Our Help
We can help to find you the perfect loan to meet your needs. When we do, we search with a panel of UK lenders on your behalf. You just need to meet some basic eligibility requirements such as:
- You are at least 18;
- You have a regular income;
- You have a bank account and debit card;
- You can afford the loan.
As mentioned above this means multiple searches are not noted on your credit file. Another advantage is that we work alongside lenders who have offered loans to people with poor credit in the past.
The lenders we work alongside offer a range of loans for bad credit UK no guarantor required and loans have some of the most competitive rates. Lenders will check your rating in the UK but also consider a verifiable income and ability to repay the loan. The lenders on the panel offer affordable loan options with instant decision and fast payout. If you are considering a payday, short-term, personal or secured loan let us help you by trying to match you with a lender.