Finding loans without guarantor being involved may seem an impossibility if your credit score is less than perfect. However, it is possible, as there are lenders who do work with people with poor credit ratings.
Here at Bonsai Finance, we work alongside lenders offering competitive interest rates even on loans that do not have a guarantor behind them. We provide access to many loan options for those with a poor credit rating with loans typically being affordable. The lenders we work with do not put much emphasis on the state of your credit file; instead, they consider your current income. This means they are more likely to offer a no guarantor loan.
The Downside to a Guarantor Loan and Why You Want to Avoid Them
Anyone with a poor credit history is more likely to be offered a loan if they have a guarantor than without one. However, while this might seem to be a good idea at first, the more you look into it, the more you find there are downsides.
One of the biggest downsides is that you have to find someone willing to sign that they will pay if you do not keep up the loan repayments. This means someone you are close to. Do you really want to put that on someone you love? Even asking someone close to you can cause issues if they would rather not be a guarantor but they do not want to admit it to you. There is also the unknown. While when you take out the loan, everything might be hunky dory. Something might happen down the road and you cannot keep up the repayments. In this case, the loan defaults to the guarantor, your friend or relative. They have to repay the loan and this is where ill feelings can crop up and destroy relationships or friendships.
Now can you see why you might want to consider loans without guarantor?
Loans without Guarantor Even for Those with a Poor Credit Rating
Once you have decided to rule out a loan with a guarantor you do not have to give up on getting a loan. There are other types of loans you might want to consider, providing you have a stable income, that does not require you to bow down to asking someone to back you up.
The type of loan most suitable for your needs would be down to how much you wish to borrow and how long you want to borrow it.
The Short Term Loan or Payday Loan
If you only need to borrow a small sum of money to pay an unexpected bill or pay for repairs, you might want to consider a short-term loan, often called the payday loan. Lenders allow people with bad credit to borrow a small sum of money, which varies depending on the lender. You then repay the money back in one or two paydays, sometimes longer, again depending on the lender. The APR on these types of loans might be slightly higher than on a secured loan but then the loan is repaid back quickly so it does not accumulate a large amount of interest.
The Secured Loan
The secured loan is another option for a loan that is popular among people with a bad credit rating. The lender asks you to put up something as collateral against the money borrowed, typically your home. On the good side is the fact that with the secured loan you can generally borrow a larger sum of money and spread the repayments over years. However, if you do default on the loan your property is at risk of being repossessed.
Whatever your choice for loans without guarantor we can help match you with a lender, regardless of your needs and the state of your credit score.