Guarantor loans are one type of loan aimed more at people with a bad credit rating who may struggle to obtain a loan, but they are not suitable for everyone. While they do have their place on the loan market and can be a good choice for some people, many people prefer loans without guarantor. So here, we are going to look into the options for loans that are available without having to have someone sign up for a loan with you.
Why Not Get a Guarantor Loan
To start with, a guarantor loan is not going to be a suitable loan for anyone with a good credit rating. If you have a good credit rating, you should be able to get approval for just about any type of loan on your own back. This means you do not have to go through the worry of finding someone to stand as your guarantor.
While guarantor loans may be a good option for someone with bad credit, they are not without their faults. The biggest fault with them is you need to talk to someone about your finances and more so about the fact that you are having money issues and cannot get a loan on your own.
Asking someone to stand as a guarantor puts a burden on that person and the relationship. While you might have full intentions of repaying the loan, something unexpected could crop up. It might mean you can no longer repay the loan. In this case, the loan repayments default to the guarantor and they have to take them over.
Even if you do not mind the idea of putting the burden on someone else, you might not have a friend willing to take on the loan or someone that you feel close enough to ask. Bear in mind that the guarantor cannot be a spouse or partner.
Thankfully, this is not going to be an issue as there are plenty of options and loans that do not need you to lean on someone else. All of the loans we are going to talk about below you can apply for on your own.
Types of None Guarantor Loans
First, let us look at the types of loan anyone can sign up for whether they have a good or poor credit rating. Then we will focus on which loans might be better for people with poor credit ratings.
The loans we will look at in this article include:
- Personal loans;
- Short-term loans;
- Payday loans;
- Secured loans.
Loans without Guarantor for Good Credit Ratings
If you have a good credit rating and you are looking for a loan, you will not find much difficulty in being approved for any loan.
People with good credit ratings are usually offered some of the best rates of interest on loans. They can apply for any loan on the market with good approval rates.
Have You Considered Personal Loans?
If you are looking for a loan of many thousands of pounds that can be spread out over many years a personal loan might be a good choice.
With a personal loan, you might be in a position to borrow up to £5,000 with the lenders we work alongside. The loan may be spread out for up to as long as 36 months.
While people with a good credit rating might find it easy to get approval for a personal loan if you have a bad credit score you might struggle for approval. This is because lenders are more stringent when considering lending thousands of pounds so they will consider your credit file more than they might if you only want a small loan. On saying this, we do work alongside a panel of lenders who will take current circumstances under consideration and verifiable income. Lenders will make an affordability check, so just because you have a poor credit rating it doesn’t automatically mean you won’t be considered.
Of course, someone with a good credit rating can apply for all of the above loans in the list and expect to get approval far easier than someone might with a bad credit rating. Along with this the APR is generally lower for good ratings.
So with a good credit score, a personal loan might be a good choice, but what if your credit rating is not so good or you have a bad one? What are the choices of loans that do not need a guarantor then?
Loans Aimed at People with Poor Credit Ratings
People with poor credit ratings are not going to find it as easy to obtain a large loan as those with good credit scores, but some types of loans might come with a better chance of approval.
Loans that do not require a guarantor that people with poor credit scores might find it easier to obtain include the payday, short-term loan and secured loan. Each of the loans has advantages and disadvantages, such as limits as to how much you can borrow and how long you can take the loan over. However, they may all be viable options for borrowing with a poor credit score.
The first two are only small loans, the loans come with an upper limit, so lenders are not too worried about past credit history so will consider people with less than perfect credit scores. Again, there is no guarantee of being approved but the chances are better than when applying for a personal loan offering thousands of pounds repayable over several years.
Are You Considering A Payday Loan?
Out of all loans, the payday loan is the most popular type of loan that people with bad credit ratings apply for and find approval for relatively easy.
A loan of this nature is usually offered between £100 and £500. The loan is paid back on your next payday or it can be spread over up to three paydays.
Payday loans do not offer huge sums of money and they are not long-term loans that can be spread out over many years. They are mainly intended for people who come up against a financial outlay that was unexpected and where they do not have the money to cover the outlay until their next payday.
For instance, if the car breaks down and it is relied on for work and you know you can afford to pay for repairs on your next payday but it is some time away. In this instance, you could borrow the money with a payday loan and repay the loan within one to three paydays. You could even save money this way as you would not have to pay for public transport, which can be costly.
With a payday loan, you can borrow the money, get the car repaired quickly, be back to your normal life, and pay off the loan as agreed.
Of course, this is just one example where a payday loan could help and there are many more.
You can pay back the loan in one lump sum on your next payday, with interest added on for the 30 days or spread it for up to 90 days. Of course, the longer you take the loan over the more interest accumulates.
What about a Short-term Loan?
A short-term loan is another loan type that people with poor credit ratings may find easier to be approved for than other loans.
This loan can be taken out for any reason and lenders usually do not need to know why you want to borrow the money. It cannot be spread out over many years, with lenders generally offering loans for up to 12 months.
Lenders usually allow people to borrow up to £1,000 with short-term loans but this is going to depend on your credit rating and the lender. Some may offer more and some less.
When applying for short-term loans without guarantor the amount of interest you pay on the loan is going to be dependent on the APR. The annual percentage rate is what determines the interest with generally the lower APR the less interest payable.
Another thing to check with the loan is if there is an option to repay the loan earlier than what was initially agreed. Some loans might have what is called an early repayment clause attached to it. If this is the case, you are expected to pay a fee in the event you drop lucky and find you are able to pay off the loan earlier than expected. This may outweigh any savings on the interest you might have made by paying off the loan early.
What is involved with a Secured Loan?
Finally, there is a secured loan. This is very similar to a personal loan and you can borrow the same as with a personal loan and spread the loan over many years. However, where the two loans differ is that when offering a secured loan the lender will want you to secure something against the amount you are borrowing.
Secured loans generally offer many thousands of pounds, so the lender will want something of value as collateral and this is usually a vehicle or property. As you are securing something against the money you want to borrow you stand to risk whatever is collateral if you find you cannot repay the loan. Therefore, great care has to be given before rushing into this type of loan.
Finding the Perfect Loan for Your Needs
It is not always easy to find the perfect loan for your needs, more so if you have a less than perfect credit score. Lenders will generally welcome people with good credit ratings with open arms but not many are as welcoming if you have a bad credit score.
We Can Help to Match You with Lenders Who Consider All Circumstances
There is some good news, however, if you do have a poor credit score and want a loan, as we might be able to match you up with a lender who is willing to consider all circumstances. We work alongside a large panel of lenders who do just that. This means half the battle is won already, as by allowing us to search with the panel we work with you already know they will consider you and not automatically turn their back on you. Of course, there is no guarantee that you are going to be accepted.
Making Sure the Loan is Affordable
Whether you will be granted a loan is going to depend on several factors. These include your income and outgoings and whether the lender believes the loan is affordable. All ethical lenders will check for affordability before approving or denying a loan.
Eligibility Plays a Factor
Regardless of the type of loan you are looking for, you do have to be eligible to apply for a loan. This also applies regardless of your credit status. Eligibility requirements include the following:
- You are at least 18 years old when applying;
- You can prove you have a regular income;
- You are living at an address in the UK;
- You have a bank account in your name;
- A debit card is linked to the bank account;
- The bank account can have a direct debit set up on it for the loan repayments.
Which Loan Is Most Suitable?
As you will know by now there is a range of loans that do not require a guarantor so there is sure to be one suitable for your circumstances.
If you only need to borrow a small amount to meet an emergency a payday loan might be most suitable. If you have a good credit rating and need a large sum, a personal loan is needed or if you have a bad credit score and need a large sum, you might be better off considering secured loans without guarantor.