Is it possible for people with less than perfect credit ratings to obtain loans for bad credit no guarantor? While there is no guarantee of getting a loan, it may be possible and here we are looking at the choices and options open to people.
In this article, we will cover many topics about loans and bad credit. These include:
- The guarantor loan;
- Alternative loan options;
- What lenders consider;
- How you can boost your credit rating;
- Why you might want to apply for a loan with our help
- Criteria for Applying for a Loan in the UK;
- Steps to Apply for A Loan.
What Is A Guarantor Loan and Why Avoid One?
First, let’s talk about a guarantor loan. They are easier to find approval for if your credit rating is poor so why you might want to avoid one? Actually, there are many reasons why you might want to consider an alternative type of loan.
One of the biggest downsides to the guarantor loan is you need a guarantor. The guarantor has to be willing to take over the loan repayments if you fail to meet them. This means you are expecting a lot from a close family member or friend.
Of course, you also have to be willing to open up about the fact that you cannot get a loan, which is not easy in the first place.
Another downside to a guarantor loan is that the rate of interest is generally higher than with other loans, which means it costs you more to borrow.
Alternative Loans for Bad Credit No Guarantor
Thankfully, guarantor loans are not the only type of loan that people with poor credit ratings might be able to obtain. In fact, there are many other options available.
Popular loans that people with bad credit ratings may be able to get include:
- Payday loans;
- Short-term loans;
- Secured loans/personal loans.
Short Term Borrowing with Small Sums
If you have a poor credit rating it is going to be difficult to find approval for a loan of many thousands of pounds over a long period, there is no getting away from this fact.
So, with this in mind borrowing smaller sums may be a good way to start. If you borrow a smaller sum of money and repay it back quickly, it shows the lender you are responsible and it can lead to your credit rating improving and better loan options.
The payday loan is one type of loan that is generally easy to find approval for with a poor credit rating if you only need to get hold of a small amount of money. These types of loans generally offer between £100 and £500.
A payday loan can come in extremely handy if you suddenly find yourself met with a financial outlay that you did not budget for and your next payday is still some time away. Below are three common reasons where a payday loan might come in handy.
- You might have forgotten about a large bill, the final demand has come, and payday is still some time away
- The vehicle you rely on for taking the kids to school and yourself to work breaks down and you don’t have the money for repairs until your next payday
- A major appliance such as cooker or freezer breaks down and you need to replace or repair it before next payday.
Of course, there are many more reasons why you might need to get hold of money fast to meet an emergency outlay. In fact, you could apply for a payday loan for any reason.
What to Consider With a Payday Loan
Just as with any other type of loan, there are things to consider before applying for the loan.
The interest that accumulates on payday loans differs from such as personal loans in that it is added on daily.
For instance, if you take a payday loan over 30 days and intend to repay it back in one lump sum including interest on your next payday, 30 days of interest is added on. However, if you choose to spread the loan over 90 days, three paydays, 90 days of interest is added on. Essentially borrowing the money is going to cost you three times as much as had you repaid it in one lump sum on one payday.
So, spreading out the loan can make the loan more affordable in the short-term, however, it is more expensive in the long term.
If you want to borrow up to £1,000 and extend the loan out for a longer period than three months, you might want to consider applying for a short-term loan.
What lenders may consider a short term is debatable. Some lenders may class 6 months as a short term, others may say 12 to 18 months. It really does depend on the lender.
Again interest is something to consider when borrowing as the longer you take the loan over the more interest is added on. The interest is calculated by the APR or annual percentage rate. People with poor credit scores offered loans are offered them with interest rates that are higher than those with a good credit rating are.
It can be tempting to borrow more money than what you actually need. Generally, the more money you borrow the cheaper the interest rate. While it may seem a good idea to borrow more and spread it over a longer-term, the loan is going to cost you a great deal more. Work out how much you can afford to borrow and stick to it no matter how tempted you might be.
Secured and personal loans
If you need a larger loan and want to spread the loan out over the years, you might consider a secured or personal loan.
The personal loan is an unsecured loan, which does not require you to put anything up as collateral against the money you want to borrow. However, this type of loan is more difficult to find approval for with a bad credit rating.
The secured loan allows you to borrow a larger sum of money and the interest rate may be slightly lower than with a personal loan. However, the downside is you have to put something as security up against the loan, generally your home, vehicle or something of equal value. In the event you cannot make the repayments, you stand to lose whatever you used as collateral.
What Lenders Look At When You Apply for a Loan
Whenever you apply for loans for bad credit no guarantor needed in the UK, the lender is going to check your credit score.
They will want to find out how you have managed credit in the past. Lenders will want to find out:
- How much credit you owe;
- Whether you have been late with repayments;
- If you have missed any repayments;
- The percentage of credit you have used on credit cards;
- How many credit accounts you hold;
- Whether you have CCJs;
- If you are on the electoral roll.
How You Improve Your Chances of Getting a Loan
To improve your chances of obtaining a loan make sure you look at your own credit score.
You might have errors on it from accounts you have paid off, which have not been cleared on your credit file.
Always make repayments on time. This applies to not only loans or credit card debt but also utility bills, mobile phone bills and catalogue or store credit.
Make sure that any loan you are considering is affordable. Sit down and calculate the money you have coming in and payout. This way you know how much you have leftover. This money is classed as disposable income, and it is money that could be used for loan repayments. This is also something that any ethical lender will do before approving a loan.
Reasons to Apply for a Loan with Our Help
Applying for a loan online is one of the quickest ways to find out if you can get a loan. You get an instant decision and if approved money could be paid into your bank account on the same day, perhaps within hours.
While you might apply on your own by making a search, you might want to allow us to try to match you up with a lender. We do not offer loans; instead, we work to bridge the gap between lenders willing to consider verifiable income not just credit ratings and those with poor credit history looking for loans.
All you have to do to search for loans with multiple lenders is make a single application. This means multiple searches are not recorded on your credit file and you boost the chances of finding a lender.
The lenders we work alongside offer affordable loan options along with some of the most competitive interest rates for people with poor credit ratings.
Criteria to Meet
There are some criteria to check for and meet before you can apply for any loan in the UK. To be eligible for a loan you need to:
- Have a regular monthly income coming in;
- Have an address in the UK;
- You are at least 18 years old;
- You have a bank account;
- You have a debit card in your name.
All lenders ask that you meet this criterion. A regular income is classed as money that you have paid into your bank account on a regular basis. This includes income from paid work or some types of benefits.
Easy Steps to Apply for a Loan
Applying online is easy just follow the steps below:
- Tell us how much you would like to borrow
- Tell us how long you want to take to repay the loan
- Give us your personal details including income and outgoings
- We will give you an instant decision
- We search with a large panel of UK lenders for a loan to fit your needs
- If we match you with a lender you can check the details of the loan to make sure it meets your needs
- If happy to go ahead sign up the loan online without the need to wait for paperwork
- The lender will pay the funds from the loan into your account
- You make sure money is in the bank for repayments
- Pay off the loan and you get a step closer to your credit score improving.
There are several types of loans suitable for people with poor credit ratings, including payday, short-term and secured loans. The most suitable depends on the sum of money you need to borrow and when you can repay it.
If you only need a small cash sum to tide you over until next payday, a payday loan might be to your advantage. If you need a little more money and wish to spread the repayments for up to one year a short-term loan could be more suitable.
For larger loans with a poor credit rating, it may be possible to obtain a secured or personal loan.
Apply today with our help and we can try to match you up with a lender from a large panel of lenders who consider all circumstances when offering loans for bad credit no guarantor needed.