No Guarantor Loans

No Guarantor Loan: 5 Alternatives to Choose From

5 Alternatives to a No Guarantor Loan

It’s been a year since the onset of COVID-19, and we’re still locked at our homes. The pandemic has disrupted our mental as well as financial peace. Some were furloughed while some of us lost our jobs during the crisis. Despite the government’s efforts to pull out citizens from this whirlpool, people struggle to cope even with their day-to-day expenses

To top it all, lenders have lost confidence in borrowers’ repayment capability, forcing them to restrict the lending criteria. Some lenders may ask for a guarantor or a co-signer for you to get the loan. But not all of us comfortable involving friends and family in our financial problems. Besides, it’s possible for you not to have a guarantor. In such a case, it is better to borrow a loan without a guarantor

In this article, we’ll learn about no guarantor loans in greater depth. Read on to discover 5 alternatives to a no guarantor loan. 

What are no guarantor loans? 

Before jumping to the concept of no guarantor loans, let’s take a quick detour and understand what or who a guarantor is. A guarantor is a close friend or family member who partakes in a loan’s obligations with you. By signing the contract, a guarantor legally takes the responsibility of repayments in the event of a default by the original borrower. If your guarantor fails to oblige to the loan’s terms, the lender may get a CCJ issued against their name. A guarantor needs to understand that they’re putting their credit rating on the line by co-signing the loan. 

Most lenders only ask for a guarantor from applicants with below-average credit rating. Since it’s done to reduce the risk of loss, you should get a guarantor with a decent credit rating and stable income. Whether or not default will jeopardize your guarantor’s assets, depends on the kind of loan you’re opting for. Guarantors are generally required for unsecured loans, so your loan may pose little to no risk to their assets. 

Technically speaking, most loans are loan without a guarantor. Personal loans, secured loans, home improvement loans, short-term loans, or title loans, per se, don’t require a guarantor. No guarantor loans are a great option for people who don’t have a guarantor or want to avoid involving a third person into the equation. 

Your credit history plays a crucial role in the lender’s assessment. Your creditworthiness and affordability will dictate the loan’s terms. You should know that unsecured loans tend to higher interest rates than secured loans. Just how high these rates can go, depends on your credit score and income. It’s easier for borrowers with good credit rating and stable income to qualify for competitive interest rates. While those with poor credit history may find a lender willing to lend to them, but at extortionate interest rates.

Why might I consider a no guarantor loan?

Guarantor loans put the guarantor under a lot of pressure. So not wanting to involve a guarantor cannot be narrowed down to one reason. Perhaps there’s no one in your social circle with whom you can share your financial problems. Even if you find someone, they may not be comfortable sharing their details or may not have a good credit history. 

Assess why you’re taking out a loan in the first place. Do you need a loan to consolidate your debt? Perhaps you need a personal loan to finance your home improvement project. However, if you have a debt problem, another loan will only add to your debt pile. Seek professional help to cope up with your debt. Denial shouldn’t be your coping mechanism; in this case, it will only make things worse. 

Consider the pros and cons of a no guarantor loan

A no guarantor loan may help bring some balance into your financial life. Below are some pros and cons of no guarantor loans that you should consider before opting for one:


  • Quick Processing: Borrow hassle-free with automated application portals. All you need to apply for a no guarantor loan is your details, a computer and an internet connection. 
  • Choice of Loans: There are many loan options to choose from, especially true for unsecured personal loans. Weigh the pros and cons of each option before making the final call. 
  • Convenient and straightforward: Lenders usually transfer money pretty swiftly once your loan gets approved, saving you a great deal of time. 


  • Poses a risk to credit score: Defaults can be harsh on your credit score. Some lenders might press legal charges and get a CCJ issued against you, further hurting your credit score. This could hamper your chances of securing a loan in the future. 
  • Early repayment charges: Some lenders impose a charge on early repayments. It is vital for you to thoroughly read your contract to check if your lender levies an early settlement fee. 

5 alternatives to a no guarantor loan

Here are some alternatives to a no guarantor loan:

  • Credit Union Loans: Credit Unions are not-for-profit lending institutions that lend small loans to their members. All members pool in their savings and accumulate a fund. Now a member in need can apply for a loan and use money from the fund. These member-owned financial cooperatives lend money at interest rates as low as 3%. To be eligible, you must be a member of the union, earning a specific salary.  
  • Credit Cards: Several credit card companies offer 0% interest for a promotional period of 3-6 months. As long as you repay the balance within this promotional period, you won’t have to pay any interest. However, once this period expires, the interest rates may shoot through the roof. So carefully assess this option before getting a credit card. 
  • Secured Loans: Secured loans require the borrower to declare collateral against the loan. Homeowner loans or title loans are good examples of secured loans. You can avail a secured loan at comparably lower interest rates since it’s less risky for lenders. A lender can repossess your asset if you default on the loan. However, this option poses a threat to your assets, so check if you can afford this loan before applying for it. This will help you minimize the chances of a default. 
  • Authorized Bank Overdraft: Overdraft is a facility provided by your bank that allows you to withdraw money from your account, despite zero balance. Essentially, you will be in debt with your bank when you avail an overdraft. Overdrafts, however, come at comparatively higher interest rates. Also, unauthorized overdrafts can be detrimental to your credit score. 
  • Borrow from friends or family: Bringing up your finances in front of your family and friends can be awkward for some. Show some faith in your loves ones and open up about your problems with them. You’re better off confiding in your family than paying off a high-interest loan. Create a repayment budget to reinstate some confidence.