One type of loan that often appeals to people with poor credit ratings is guarantor loans. The loans are portrayed as being an easy way to borrow money with a poor credit rating but they are not all they are cracked up to be. We are going to talk about why many people favour no guarantor loans and the alternatives options out there for borrowing with a poor credit rating.
We will take a look at:
- What is wrong with guarantor loans;
- The types of loans available that don’t require a guarantor;
- The criteria for applying for loans;
- How to apply for a loan with ethical lenders.
What’s wrong with Guarantor Loans
Guarantor loans can work in many circumstances providing they are taken out with an understanding of how they work and are repaid as agreed with the lender.
Over 3,000 people have sought advice in 2019 concerning guarantor loans. However, in many cases, these types of loans have left people in debt by many thousands of pounds; more than double what was originally owned.
Guarantor loans have come under fire with around 50% of those seeking help doing so due to guarantor liability. High-interest rates were another factor in these types of loans.
One Labour MP in the UK led a campaign, which saw the FCA change the rules in regards to payday loans, and is now seeking that the same caps on interest and fees should apply to all types of credit. The payday sector had been an area that was criticised with some unscrupulous lenders targeting those with poor credit ratings and charging extremely high fees and interest rates.
Thankfully, this has now changed and payday loans can work as intended providing the loan is repaid as agreed and is taken out with an ethical lender in the UK.
In the past, some lenders have handed out guarantor loans without the guarantor really understanding what they have signed up for. This means they had no idea that they would have to take over the loan repayments in the event the person they stood up for failed to make them. Lenders should fully explain the details of guarantor loans to both the person wanting the loan and the guarantor and make background and affordability checks on both, however, some lenders did not.
Thankfully, there are different types of loans that do not need a guarantor. All of the loans we are going to talk about below are non guarantor loans. They include:
- Payday loans;
- Short-term loans;
- Personal loans;
- Secured loans.
Only Need to Borrow a Small Sum of Money?
If you find you are met with a sudden unexpected financial outlay and need a small sum of money to carry you over until your next payday comes around you might want to give thought to a payday loan.
This type of loan is popular among people who have a poor credit rating and who find it difficult to be approved for credit. As such, it can be a good starting point to get back onto the borrowing ladder and it could even help to improve your credit rating.
Borrow between £100 and £500 with Payday No Guarantor Loans UK
With payday loans, lenders generally offer a sum of money in the region of £100 to £500.
The amount borrowed is only small in the eyes of the lender so they consider people even if their credit rating is less than perfect.
The loan is only very short term, usually between one and three months. Interest is calculated on a daily basis so if you were to repay the loan in one month you would pay a lot less in interest than if taking it over three months. The repayment or repayments are calculated with interest added on and taken from the bank account you gave at the time of applying for the loan via direct debit.
Payday loans can come in handy for many reasons, with people generally applying for them for such as:
- To meet the repayments of a bill that had been forgotten about;
- To pay for unexpected repairs to a vehicle;
- To pay for replacement tires;
- To meet the repair costs of a household appliance that breaks down that you cannot manage without;
- To pay off an unexpected overdraft which would incur high charges.
Providing you have worked out your finances, and know that the repayment of the loan is not going to leave you short when your payday comes around, the loan can work as intended. It helps you at a time when you need it and it is not hanging around your neck with you having to find repayments every month for the long term.
If you repay the loan as agreed and pay it off in full, it can even help to improve your credit rating as it is noted on your credit file.
Borrow Up To £1,000 without a Guarantor with a Short-Term Loan
You might find you need to borrow more money than what lenders offer with a payday loan, if this is the case, you might consider a short-term loan.
Most lenders offering short-term loans will allow you to borrow up to £1,000 and spread the cost of the loan for up to 1 year. This is going to depend on the lender along with your credit rating and if the lender believes the loan is affordable.
All ethical lenders in the UK will make an affordability check to ensure you can repay the loan. This means they check the amount of money you have coming in and what you pay out each month.
Need A Larger Loan Over Longer?
If you need a larger loan over a longer period, you might struggle if your credit rating is very low. However, it may not be impossible to get a personal or loan of up to £5,000.
While lenders are going to check your credit rating, as the amount of money you want to borrow is relatively high, they will also factor in your ability to repay the loan.
There is a difference between personal loans and secured loans; however, neither of them requires that you have to have a guarantor standing by your side so they are both loans that do not require a guarantor. However, it is important that you understand the terms and conditions associated with both types of loans.
Personal Loans without a Guarantor
First, let us look at the personal loan. It is given the name as the funds from the loan can be used for any personal reason, for instance, to spend on a well-deserved holiday or to pay for a wedding.
The amount of interest put onto the loan is going to depend on the APR, which is the annual percentage rate. The longer you take the loan over the more interest will be added onto the loan. It makes sense that if you take a loan out over 12 months you are going to pay twice as much interest as you would if you had taken the loan over 6 months. Therefore, to keep the cost of borrowing down do some homework and work out the least amount of time you could borrow while ensuring the monthly repayments are affordable.
If your credit rating is so poor that lenders will not offer you a loan but you still need money you might want to consider a secured loan.
You do not need a guarantor with the secured loan but you are going to have to put something up against the sum of money you want to borrow, this is usually something of extreme value.
If you cannot repay the loan, you are at risk of losing whatever you put up as collateral.
Eligibility Requirements for Loans
All loans in the UK whether they require a guarantor or not, good or bad credit score, do come with some eligibility requirements.
- You do have to be over 18 years of age;
- You need to live in the United Kingdom;
- Have a regular income coming in;
- Have a bank account in your name;
- Have a debit card attached to the bank account and direct debits can be set up.
We Can Help You to Find Non Guarantor Loans
You could go out onto the internet in search for a loan yourself but searching for the right lender willing to offer you a loan without a guarantor could take a long time.
Even worse is the fact that when you make multiple applications for loans they are noted on your credit file and this goes against you. Lenders can see you as being desperate, which is not a good thing and you might have to apply with several lenders before being approved.
We Can Bridge the Gap between Lenders and Borrowers
There is a way around this and that is to allow us to bridge the gap between you and a large panel of lenders in the UK. Yes, we work alongside lenders who offer affordable loan options with some of the most competitive rates of interest. Lenders we work alongside will consider your personal circumstances along with your credit file as they realise that things might have changed for you.
Apply Once Search with a Panel of Lenders in the UK
The good thing about allowing us to help you find a loan is that you only need to apply once. We will do the rest and if one lender cannot offer you the loan, you want, we simply move onto the next lender.
To start your loan application you just have to provide us with a few details.
- You tell us how much you want to borrow and when you want to repay the loan.
- Once we have the details we can search with our panel of lenders to try to match you up with a lender.
- If successful, you can then check out the details of the loan and once you are satisfied the loan is right for you, you can go ahead and sign up.
- In many cases, the funds from the loan are paid out on the same day.
Finding a loan without a guarantor if you have a poor credit rating is never going to be the easiest of things to do. However, we can help to simplify this by being in the middle.
We do not offer loans ourselves but you can benefit from us looking for a loan on your behalf as it saves a great deal of time and you don’t have to make multiple applications so the searches do not show up on your credit rating.
If you want money fast in an emergency, using our service might make the difference between you being approved for a loan on the same day and being paid the funds into your bank account on the same day or spending a long time searching from lender to lender. There is no hanging around waiting to find out if you have been approved as you get an instant decision.
The lenders we work alongside offer personal loans based on verifiable income as opposed to focusing too deeply on your credit rating. They offer some of the most affordable rates based on your circumstances, bearing in mind that with a poor credit rating you are not going to be offered the lowest APRs.
Apply today for no guarantor loans with our help and if approved funds could be paid into your bank on the same day.