You must have heard how important an emergency fund is over and over again. However, building a safety net requires a lot of time and money management skills. Only creating a budget planner will not help you reach your financial goals. And during such times, when we find ourselves stuck in situations where we need money to cover the unexpected expenses. Many lenders ask you to provide a guarantor when you apply for a loan. Can you get a personal loan without a guarantor? The answer is yes.
Let us take a closer look at how no guarantor loans work. We will explain about a guarantor loan so that you can weigh your options while choosing one out of them.
What is a guarantor loan?
A guarantor loan as the name suggests is a loan that you can borrow with a co-signor. You can ask your friends and family to act as your guarantor. A credit check will also be conducted on their report to evaluate their creditworthiness and affordability.
If you fail to repay the loan, your guarantor has the responsibility to pay it back. The lender can reach out to the guarantor in case of any default. It will impact both of your credit histories. For this reason, choose a guarantor who can manage to repay the loan amount if you anyhow fail to keep up with the repayments.
What is a no guarantor loan?
A no guarantor loan is a personal loan that you can borrow without providing a co-signor who can pledge along with you for loan repayment. In simple words, it is an unsecured personal loan that needs no guarantor.
Generally, if you have an excellent credit score, lenders will be willing to offer you a no guarantor loan. The loan term may be as less as 1 year and can go up to 7 years. The repayments can be spread over several months as chosen by you while filling up the loan application form.
Reasons people borrow no guarantor loans
You can use a no guarantor loan for a variety of reasons. We have listed 5 top reasons for which people take out a no guarantor loan.
1. Home Improvement
You can use the money to make improvements to your property. Making improvements to your property will also increase the overall cost of your property. Make a list of all the upgrades you are considering and prepare a budget accordingly. Home improvement is an expensive project and not all of us have thousands of pounds lying around for making upfront payments. You can use your savings along with a no guarantor loan to finance your home improvement project.
2. Finance your Vacation
Longing for a weekend getaway? Or you are holding back your plans for the exotic family trip for a year? A no guarantor loan can help you finance your vacation. If your loan application is approved, you will get the loan disbursed to your bank account. Use it in cash while on your trip rather than putting everything on the plastic.
3. Wedding Expenses
We all dream of creating memories and celebrating the new chapter of our lives in a grand way. If you haven’t saved up enough money to finance your wedding, you can borrow a no guarantor loan to cover the shortfall in the expenses that you are about to face. Repay in fixed monthly installments and choose the repayment period wisely so that it doesn’t create financial trouble in your marriage life. Talk to your partner before borrowing a loan and discuss if they have any other alternatives that can be used instead of a personal loan.
4. Buy a Car
Looking for financing options to buy your dream car? Falling short of money? Use a personal loan to cover that gap in finance. Drive that new car and repay in monthly installments. Your car will not be used as collateral. So, even if you fail to repay the loan, the lender cannot take away the car. Although not repaying your loan can have a serious impact on your credit score. A damaged credit score will influence your future borrowing experience.
5. For Personal Reasons
You can use the money to pay your medical bills, school and education fees, or use it for your daily expenses. There is no restriction on usage. However, you must not use it for gambling, investing in stocks and bonds. If you lose the money in gambling, and you fail to arrange for the repayments, you will be trapped in severe financial difficulty.
How can I apply for a no guarantor loan?
A no guarantor loan is an unsecured loan, which can be secured without any collateral. The amount that you can borrow depends on your credit score. If you have a good credit score, lenders may offer you loans at a low-interest rate. But with a poor score, you are more likely to receive offers that have high-interest rates.
Before applying for an unsecured personal loan, search the market, and compare various offers. Different lenders have different lending criteria. Suppose, Lender A is quoting 25% APR for amount X, Lender B may offer 23% APR for the same amount X. If you compare loans before borrowing, you can save money on the interest that you have to pay.
Go to the lender’s website and fill in the loan application form. Review the Terms & Conditions proposed by the lender. Also, read the fine print before signing on the dotted line. Ensure that you have a concrete repayment plan to keep your finances on track.