Obtaining a bad credit rating is easier than fixing one. A couple of late repayments from a previous loan could have jeopardised your chances of borrowing again. Getting your credit rating back to its former glory can take months. In the meantime, if you are stuck for money and need a loan it can be difficult obtaining credit. You may be offered a guarantor loan but for one reason for another, it might not be suitable. Thankfully, there are some lenders out there who offer loans for bad credit UK no guarantor needed.
The Problems with Getting a Guarantor Loan
There is no denying that a guarantor loan is generally one of the easiest to apply for if you have bad credit. However, this type of loan comes with many issues.
The biggest of these is that first, you have to find a guarantor and this may be no easy task. Sure, you might have relatives or friends, but do you really want to put them in the position of having to stand guarantor. If they do not want to be a guarantor, they have to decline and friendships could be hurt,
With all good intentions of being in a position to repay the loan something might happen that means you are unable to continue repaying. If you falter on the loan, it falls to the guarantor to pay it. If this were to occur a relationship or friendship can be destroyed, this is one of the main issues with the guarantor loan but thankfully, we can offer alternatives.
The Benefits of Applying For Loan without a Guarantor
Loans without a guarantor are generally smaller loans than those you take out if you had a guarantor. Generally, they are called short-term loans. Loans of this nature usually allow you to borrow money:
- Between £100 and up to £5,000;
- Then repay it over a shorter term, 3 months to 36 months.
We work with lenders who may be able to offer a loan without a guarantor that is affordable to you and which comes with competitive interest rates.
By borrowing a smaller sum of money and repaying it back quickly lenders realise you are trustworthy. By paying off a smaller loan quickly and on time, your credit rating will improve. Of course, failure to repay or late repayments would have a negative effect on your credit score and will damage your ability to be able to borrow again.
Loans of this nature are either short-term loans or payday loans. Which one is most suitable will depend on the sum you want to borrow, and how many months you spread the loan over.
Comparing Short Term Loans and Payday Loans
While both the short-term loan and payday loan offer smaller amounts of money than a guarantor loan, there are some differences. These are:
- If you only want to borrow £750, and you know you can repay it within 3 months; you might be more suited to a payday loan;
- If you wish to borrow upwards of £1,000 and repay the loan over 6 months, a short-term loan may be more suitable.
A Payday Loan May Have Higher Interest but Is Easier to Get Approval
Both the short-term loan and payday loan will accumulate interest over the term of the loan. This means the longer you take the loan over, the more interest will be accumulated. One of the main differences between the short-term loan and payday loan is the APR.
The payday loan usually has a higher rate of interest than any other type of loan. The short term loan included. On saying this, they are one of the easiest types of loan to get approval for without a guarantor and the amount you borrow is relatively small compared to other loans.
With a payday loan, you can repay it on your next payday or spread the cost over two or three months. You have to weigh up that you don’t want to leave yourself short of cash on your next payday, but the longer you take the loan over, the more interest it will accumulate. By spreading it out over two or three paydays, you might find it less stressful.
If you are repaying the loan over two or three paydays you will have a minimum repayment on set days, your paydays. This amount will include some of the money borrowed and the interest up to that date. Payday loans usually incur interest charges per day. The same will apply on the set date of your next payday and so on until you have repaid the total sum and total interest.
Is A Payday Loan Suitable For You?
A payday loan might be appropriate for anyone who finds they need a small amount of cash in an emergency. This might be for:
- A bill that was forgotten about but needs paying immediately;
- It could be to pay for car repairs;
- The MOT you forgot about;
- New tires after a puncture on worn ones;
- To buy a new freezer if yours has broken down;
- To pay for repairs to major appliances;
- To tide you over until your redundancy money comes through.
In short, if you want a small amount of emergency cash that can be repaid back within a month or two, the payday loan might be suitable. If you want a larger sum of money and want to be able to repay over several months, the short-term loan might be the most suitable.
Eligibility for Short Term Loans and Payday Loans
You need to be be eligible to take out a short term or payday loan. Generally, the lender will want to know that you:
- Are over the age of 18;
- Have a regular income each month;
- Reside in the UK;
- Have a bank account;
- Have a debit card;
- Can access direct debits on the bank account.
What Factors Do Lenders Take Into Account For Loans for Bad Credit UK No Guarantor?
When anyone applies for a loan of any type lenders will consider certain factors when deciding to grant or deny a loan. This even applies to guarantor loans.
By law, all lenders in the UK must consider your credit rating. However, just because you have a bad credit rating, it does not necessarily mean that the lender will say no. We work together with a range of lenders who offer loans to those with poor credit ratings. Whether you are approved will depend on additional factors.
One of the principal factors is whether the lender thinks you can afford a loan right now. This means they take into consideration your current income and whether this is a regular income. An income does not have to mean that you have to be in work. An income means any money coming into the home each month on a regular basis, which could include benefits.
What You Should Take Into Account
Just as lenders consider certain factors so should you before borrowing.
- Always ensure that any loan you take out is affordable and you can meet the repayments on the dates specified;
- Take into account how much in total the loan is going to cost you. This includes the amount of interest on the loan;
- Make sure you know about any fees that you have to pay related to the loan before signing up for the loan and calculate these in;
- Make sure that any loan does not come with an upfront cost. Our lenders will never ask you to pay out money upfront;
- Make sure you know exactly when the loan has to be paid;
- Make sure sufficient funds are in the bank for the repayment days otherwise you will fall behind on the loan and your bank will charge you fees.
We work with a panel of lenders, all of whom take the circumstances and credit rating of everyone into account based on the individual. As we work with a panel of lenders if one lender says no to your application, we can pass your application onto the next lender. Just because one says no does not mean that they all will.
The beauty of allowing us to find you loans for bad credit UK no guarantor needed is that you only have to fill in your details once on the application. You do not have to search for lenders and fill in numerous applications, which may have a negative impact on your credit rating. You will also not have to hang around waiting for an answer and if approved money could be paid into the bank within a day or so. Talk to us about your no guarantor loan needs today and let us match you up with one of our lenders.