Guarantor loans are a type of loan that requires the lender to ask someone to stand as their guarantor when they want to borrow a sum of money. You might need a guarantor to apply for a loan if you have a poor credit rating or if you are young and have never applied for a loan in the past. While this type of loan can work in many situations, there are some people who do not know anybody who could act as a guarantor or who simply don’t want to ask someone. In this instance, you might be wondering what the choices are for no guarantor loans.
Considerations before Applying For Loans
Before rushing into applying for loans of any nature there are some considerations you might want to take into account.
Do You Really Need A Loan?
The first thing to think about is whether you really need a loan or you could manage without applying for credit.
The answer to this would depend on what you need the money for. Do you need it to pay off an unexpected bill that has cropped up, to pay for urgent repairs or are you borrowing just to take advantage of buying something frivolous? If you are struggling with money and have a poor to bad credit rating loans should only be considered if you really have to get your hands on the money fast. Therefore, the key question should be whether a loan is really the way to go right now.
How Much Money Do You Need To Borrow
If you were in short term financial difficulties and a loan would be to your advantage the next decision you have to make is how much money you need to borrow.
When thinking of taking a loan out it can be tempting to take more than you really need. While this would provide you with some spare cash, it is going to cost you more in the long run. If you need a loan, only borrow the amount of money that is really needed to cover the urgent issue that has cropped up, for instance, to pay a bill.
All loans come with an interest rate, the more you borrow, and the longer you take in repaying the loan, the more interest is going to be put on. Keep this down by only borrowing what you really need.
How Much Can You Afford To Repay Monthly
If you take out a short-term loan or personal loan, you will repay the loan over a period of time. With the short-term loan, this could be anything up to one year, while with the personal loan you may be able to spread the repayments for up to 36 months or more, depending on the lender and amount borrowed.
Before applying for loans without guarantor, work out how much you can reasonably afford to pay out each month for the loan repayments. You can do this by working out how much you have coming in and how much you pay out. This is something that the lender will also take into account when deciding whether or not to approve the loan.
It can be tempting to apply for a loan and find out that the lender is prepared to offer you more than you originally wanted. Of course, you need to take into account that the more you borrow the higher the monthly repayment will be. Stick to the amount you can afford to repay and do not be tempted to push this higher.
You also have to remember that you can help to keep the loan repayments down by spreading the loan over longer, but this way you pay more interest and more on the loan in total over the term. Find an even balance of the monthly repayments being affordable and not having to pay too much in interest.
Take Into Account Any Additional Fees
When working out the total cost of the loan with interest you also have to consider any fees that might be added onto the loan to boost up the cost of borrowing. Also considering fees, you might also want to look into the terms and conditions of the loan to find out if you would have to pay early repayment fees if you managed to be able to repay the loan early.
Applying for No Guarantor Loans
Once you have considered all of the above very carefully, you can then decide which loans without guarantor might be most suitable for your circumstances.
If your credit rating is good to fair, you will have more options available to you for loans and interest rates may be lower than if you have a poor to bad credit rating.
The most suitable loan option is going to depend on the amount of money you need to borrow and the length of time you want to pay it back. Loans that do not need a guarantor include:
- Payday loans;
- Short term loans;
- Personal loans.
You can apply with our help for any of the above loans and we will try to match you up with a lender offering the most suitable loan based on your need. We work with a panel of lenders all of whom offer competitive rates of interest and numerous loans options. The lenders we work with will consider your ability to repay the loan alongside your credit rating to determine if they can offer you a loan. If one lender turns you down, we move onto the next lender. This means you can apply for a loan with several lenders from just one application.
Eligibility for Loans
To be eligible to apply for any type of loan there are some criteria that have to be met. For instance, you will need to be over the age of 18 and have a regular income coming in. You will also need to have a bank account and debit card attached to the bank account. You will also be asked if you can set up a direct debit so you can repay the lender over the term of the loan.
Which Loan Might Be More Suitable For You?
The most suitable type of loan is all going to depend on numerous factors. For instance, the amount of money you want to borrow, the timeframe over which you want to repay the loan and your credit rating.
Borrow a Small Sum of Money with a Payday Loan
If you only want to borrow a small sum of money, generally between £100 and £500 a payday loan might be offered by lenders to cover this amount. The actual amount you might borrow is going to depend on the lender and your circumstances. This type of loan is the easiest to apply for if you have a poor credit rating or you do not need to borrow a large sum of money and you can repay it back within a month or two.
The lender will allow you to spread out the repayments over one or two months and take the agreed amount back, including interest on the due dates. These are generally the dates on which you are paid. This type of loan may be suitable if you find you need to get hold of a small cash sum in an emergency as the money could be paid into your bank on the same day.
Spread the Cost of Borrowing for Up to 12 Months with a Short Term Loan
If you want to borrow in the region of up to £1,000, you might be able to take out a short-term loan.
The short-term loan can usually be spread out longer than the payday loan but not as long as a personal loan. Lenders might offer you the ability to repay the loan over a 12-month period or so.
Borrow a Larger Sum of Money with a Personal Loan
If you need to borrow a larger sum of money, generally up to £5,000, and repay the loan back over 36 months a personal loan might be more suitable.
A personal loan is an unsecured loan that does not need a guarantor. This type of loan can be used for whatever reason you need it but some lenders may ask why you need the loan.
The APR on personal loans will differ between lenders and usually the better your credit rating the lower the APR on the loan.
Here at Bonsai Finance, we can help to match you up with one of our panel of lenders if you are looking for no guarantor loans in the UK. It takes just a few details to make an application, as the application is undertaken online, it means that you get an instant decision over the loan and money may be paid into your bank account the same or next day. By supplying us with your details we search with numerous lenders, which means there is more chance of you being matched up for a loan and all from one single application.