One type of loan that people with poor credit ratings might consider is a guarantor loan. However, they are by no means the online types of loans out there. Various other types of non guarantor loans might be more suitable and you might want to think about payday, short-term and personal loans as alternatives.
Of course, your credit score is going to determine to some extent the most suitable loan for your needs. Along with this so is your income, outgoings and loan affordability.
Which Loan Type Is Most Suitable for Poor Credit Ratings?
If you are looking for a loan with a poor credit rating and don’t want a guarantor loan and only want to borrow a small sum of money you stand a better chance of obtaining approval than if applying for a larger sum of money.
In this case, you might want to give some thought to:
- Payday loans;
- Short-term loans.
You could borrow between £100 and £500 if you apply for a payday loan. The loan can be paid back on your next payday, which is the best way to borrow with this type of loan, or you can spread the cost over three paydays.
Payday loans are generally called fast loans, quick loans or emergency loans. As they are fast to payout, they come in extremely handy if you find you need to get your hands on cash to meet a financial payout that you had not budgeted for.
Lenders may be able to offer you up to £1,000 with a short-term and you can spread the cost of the loan for up to 1 year. While this might sound a long time to you, to lenders it is only a small loan and small term.
If a loan of thousands of pounds is needed a secured loan might have to be considered. Secured loans do come with some risk, as you will need to put something of value against the loan, usually property or a vehicle. In the event the loan becomes unmanageable, the lender has whatever you secured to fall back onto to get their money back.
Non Guarantor Loans for Good Credit Ratings
If you are lucky enough to have a good credit rating, you have better options for borrowing.
Lenders are more willing to offer low APR personal loans to people with good credit along with the best deals. This means you can borrow many thousands of pounds over many years without having a guarantor of having to put something up as security.
If you are considering a personal loan, check whether the APR is fixed or variable. If fixed, this is the APR you will pay for the lifetime of the loan so you can budget over the term of the loan. You will know exactly how much the repayment will be from month to month and how much the loan will cost in total. If variable, the interest rate will fluctuate based on the Bank of England rate so it may go up or down. This means you cannot budget as the monthly repayments may change and so will the total amount you have to repay.
Of course, if you want to borrow smaller sums of money you can apply for a short-term or payday loan.
What Lenders Consider When Offering Loans
All UK lenders will consider your credit rating when you apply for a loan. However, lenders will also take into verifiable income and the ability to be able to repay the loan.
You do need to be at least 18 to apply, live in the UK, and have a regular income, a bank account and debit card, to be eligible to apply. Lenders will want to set up a direct debit on your bank account so they can take the repayments back each month.
We can help to find you a lender from a large panel of lenders and you only need to make a single loan application. You will get an instant decision and some of the most competitive rates for your circumstances with non guarantor loans.