In the past, if you had a bad credit score lenders shunned you. The lender took one glance at your past borrowing in your credit rating and ran a mile. While to some extent this is still applicable with some lenders, others are more lenient. If you do have poor credit, there are choices of loans that do not require you to have a guarantor. So if you are looking for options for loans for bad credit no guarantor in the UK, continue reading.
Even though you might have gained a poor credit, despite having the best intentions in mind when you borrowed in the past, some lenders are like elephants, they do not forget. This should not be the case as the past, is the past and should remain so if your current circumstances have vastly changed. Even though you might have paid off any prior loans, your credit rating could still be haunting you. You might now have a good job with a regular income and have some disposable income left after paying your bills. You deserve another chance at getting back on the good side of lenders. Sure, there is a guarantor loan, the easiest type of loan to be approved for with a poor credit rating, but for one reason or another, it might be inappropriate.
Why Not Go For A Guarantor Loan?
A guarantor loan is a sound option for loans for anyone who has a bad credit score and wants to borrow. This might sound like the perfect option for those with poor credit so why not go for the guarantor loan instead of looking around for another type of loan.
The biggest downside to the guarantor loan is that you need someone to stand as your guarantor. This means you have to call on a relative or friend if they would sign up for the loan with you. This can put a huge amount of strain on even the best of relationships. That is if you have someone close enough you want to risk upsetting by asking.
The trouble with being a guarantor is that the person is essentially saying they will repay the loan in the event that you find you cannot manage the repayments. This means they should have a decent credit rating and they are risking their flawless rating to stand as guarantor for you. If their credit rating is linked with someone who has a poor credit rating, their credit file can be affected too in the future if they want to borrow. This is a lot of pressure to put on someone, even if they are close to you or they are family.
So what are suitable options other than the guarantor loan. You can apply even if you have a poor credit rating for these loans. Of course, there is no guarantee that you will be accepted but if you apply for loans with our help, we can match you up with the range of lenders we work with and there is more chance of being approved.
Types of Loans for Bad Credit No Guarantor in the UK
If you have bad credit and do not want a guarantor loan, you might want to consider the following options for choices of loans:
- Payday loan;
- Short-term loan;
- Personal loan;
- Secured loan.
Now we will further narrow down these options based on the sum of money that you want to borrow, whether you want to secure your property against the money you are borrowing and how long you want to take the loan over.
Payday loan – Borrow Small Pay Back Fast
A payday loan is a suitable loan for anyone with a poor credit rating who wants to borrow only a small amount of money and who can repay it back fast.
By fast, we mean within one to three paydays or months. Essentially, you could be eligible to borrow anywhere between £100 and £500, or more, depending on the lender. This type of loan is only suitable if you know without a doubt that you can afford to pay back the loan in one to three months. This is due to the fact that it can build up a great deal of interest over the longer term.
The good news is the FCA defined rules concerning payday and short-term loans, which mean payday loan pricing has been capped.
The payday loan is a great choice for borrowing a relatively small sum of money in the event that an emergency crops up and you need to get hold of money fast. While this type of loan could be taken out for just about any financial emergency, people have taken payday loans out to:
- Cover an unexpected bill that arrived before payday;
- Cover the cost of car repairs or MOT that you had forgotten about;
- Pay for repairs to a major appliance that you cannot manage without;
- Buy a new appliance if it cannot be repaired;
- Pay into your bank to clear an unexpected overdraft.
As you will not be borrowing a large sum of money and repaying it back within a couple of months, this is one of the most suitable types of loans for people who have adverse credit. When considering this type of loan it is very important that you ensure the loan repayments are affordable. If you find yourself unable to repay the loan, you should seek help immediately and contact the lender.
A Short-term Loan
A short-term loan is another type of loan that is repaid back over the short-term. It differs from the payday loan in that the loan does not have to be repaid within one or two months. It can be spread out over several months.
The amount you might be able to borrow from a short-term loan is going to vary from lender to lender but you might expect to be able to borrow between £500 and £1,000, perhaps more. By spreading the repayments over several months, the monthly repayment cost is kept down; however, in the end you will pay more in interest. You will have to come up with a happy medium between spreading the cost and not paying more interest that you need to. Lenders generally offer short-term loans to be repaid back within 12 months. This would be dependent on the lender and their terms and conditions.
A Personal Loan
A personal loan might be applied for depending on how poor your credit rating actually is. Lenders may allow you to borrow up to £5,000 with a personal loan, which is generally an unsecured loan. The repayments may be spread out for up to 36 months, but again this would depend on the lender and your circumstances.
As with the short-term loan, you would have to choose the length of the repayment carefully. Generally, the monthly repayments are cheaper the longer you spread the loan over. On the downside, the longer you spread the loan over the more it is going to cost you in interest.
When considering the interest rates on personal loans they are given as an APR. This is the annual percentage rate. This means that if you take a loan out over 2 years you will be charged the APR for every year you are paying the loan. Loans of this nature are either a fixed rate of interest or variable. A fixed rate loan means you know where you stand right from the start as the interest rate remains over the entire term of the loan. The flexible rate or variable rate will go up and down as the Bank of England interest rate varies.
Even a slight change upwards in the percentage can mean you would be paying out a great deal more than when you took the loan out, so this is something to consider. With the fixed rate, it does not change so you know right from the start just how much you will be paying back on the total loan, with interest included.
A Secured Loan
You might give consideration to applying for a secured loan if you need a substantial sum of money but your credit rating is very poor.
A great deal of thought needs to be given before applying for this type of loan as you do have to put something as collateral against the amount you are borrowing. This is generally your home. If you fail to meet the loan repayments you are then at risk of losing your home to the lender. We would not recommend this type of loan for the majority of people who wish to borrow up to £5,000.
Factors to Take Into Account before Borrowing
Before taking out any loan, it is essential that you look at the details of any loan you are considering. Factors to take into account include:
- The APR on the loan as this is the annual percentage rate and determines how much interest is put onto the loan. The higher the APR the more interest goes onto the loan;
- The terms and conditions of the loan, which vary between providers;
- Whether there are any fees associated with the loan that need accounting for when repaying it;
- Whether the lender charges late fees, these are applicable if you wanted to repay the loan early to save on interest.
How to Apply For a Loan If You Have a Bad Credit Rating
One of the quickest ways to apply for any type of loan is to apply with us. Bonsai Finance does not offer loans but we work alongside numerous lenders who do. The lenders we work with do have to make a credit check, this is the law in the UK, but they also consider your current circumstances.
One of the biggest benefits of applying for a loan with us is that you only need to make one single loan application to search with numerous lenders. Usually, when making an application after searching for loans you will be taken to the lender’s homepage and have to apply for the loan. They will check your credit file and each time they do this it shows on your credit file. If you are rejected, you apply with another loan company and so on. Each time you are affecting your own credit rating negatively.
When applying for a loan with our help you just fill in the information once and we then try to match you up with a lender. If the first does not approve your loan, we then move on to another of our lenders.
All lenders will consider your current situation along with your credit score and base their decision on whether they think the loan is affordable to you. They also offer the most competitive rates based on your circumstances and offer numerous loan options.
To apply through us and search for your loan with our panel of lenders you should be over 18, have a regular income, a bank account, debit card and set up a direct debit. To apply just:
- Choose the amount you want to borrow using the slider;
- Choose how long you want to take to repay the loan;
- Fill in some basic information about yourself:
- Let us match you up with a lender.
We can help you find loans for bad credit no guarantor in the UK from a wide range of lenders from just one single application. The application process is simple and easy and within minutes, you will know if your application has been successful. You can then finalise the loan with the lender we have matched you with and the money will be paid into your bank account fast.