Credit services allow two types of loans – secured and unsecured. The latter has gained popularity due to ease and speed at which they can be availed by someone in need. Unsecured personal loans are guaranteed on the borrower’s repayment capability, and credit score. That means the borrower should have a reliable and trustworthy credit profile so that the lender agrees to their loan application. Most of us do not want to involve our friends or family in our financial matters. For this reason, people choose a no guarantor loan that doesn’t need them to arrange for a co-signor who will vouch for their loan application.
In this article, we will cover:
- What is a no guarantor loan?
- How beneficial it is to apply for a loan without a guarantor?
- To guarantee or not to guarantee?
- Things to keep in mind when you borrow a no guarantor loan
What is a No Guarantor Loan?
No guarantor loans are loans that do not require another individual with good credit rating, perhaps a friend or a family member, to guarantee or co-sign the loan repayment agreement. These loans are the best scope of getting required funds for meeting financial emergencies especially for bad credit individuals who do not have the means of taking out loans from different lending organisations. Loan Princess has an association with various lenders who offer you to borrow an amount from £1,000 to £35,000, which you can repay within 7 years. If you have a stellar credit report, most of the lenders will not ask you to provide a guarantor. But if you are looking to borrow a no guarantor loan with bad credit, it may become a bit challenging for you to find a deal in the loan market. Because it involves risk for the lender to give money to someone who doesn’t have a good relationship with debt in the past.
Benefits of Applying for a No Guarantor Loan
The lending organisations offering no guarantor loans clearly understand the fact that it might be very difficult for bad credit individuals to get loans from banks and other mainstream financial institutions. Therefore, these organisations look beyond the credit scores of individuals if they are not good and take pride in helping out the ones struggling to avail the right loans in the market. Prior to applying for any kind of credit or loan, it is very important for you to carry out thorough research. Whether you need cash for consolidating debts, urgent car repair or for paying medical bills or for other planned expenses like the home renovation or family holiday, it is necessary for you to take a considerable amount of time in understanding your financial condition fully and in asking yourself the following questions:
- What exactly should be the amount that I must borrow with a no guarantor loan?
- Do I genuinely need money?
- What is the amount that I can afford to pay back every month?
- What are the terms and conditions of the loan?
- What are the alternatives to a no guarantor loan?
To Guarantee or Not to Guarantee?
This is the main question. Whether you are taking out a guarantor loan or a no guarantor loan is completely dependent on the circumstances that you are facing. In case you have poor or bad credit which has been the cause of your rejection for loans, looking for a guarantor or a no guarantor loan might be the right option for you.
However, if you have no problems in asking a friend or a family member to serve as a guarantor for your loan repayment agreement then a guarantor loan or 12-month loans would be the perfect choice for you. Here, it is important to note that if the guarantor of your loan has better credit scores than yours, it would help you in getting loans at better terms and better rates of interest. This is because you are at low risk of not being able to pay back the loan amount every month. Nevertheless, if you do not find it a good idea to ask somebody close to you for co-signing your loan repayment contract, you have the option of applying for a no guarantor loan and getting approved for the same. However, in this case, it would be essential for you to take the services of a broker. Brokers have wide lender panels and are able to get their clients the best loans suited to their circumstances and requirements.
Things to Consider Before Borrowing a Loan with No Guarantor in the UK
When you need a loan without a guarantor, the offers that you may receive has a high-interest rate. It is important to assess your repayment capacity well before availing a loan as it is going to substantially add to your financial obligations. Herein a broker can help you understand the cheaper avenues to borrow loan.
For example: Being a homeowner you can get a low cost no guarantor loan. The broker can help you find a loan for homeowners at better prices. According to your loan requirements, they will share the available deals with you. You can compare and choose the one that serves your purpose.
Despite the high cost of no guarantor loans, many borrowers prefer for the same owing to less stress associated with these loans. You can make an independent decision and need not avail a consent of a third party for a loan. Many people do not prefer to discuss their financial situation with other people and thus using no guarantor loans they also protect their social freedom. If planned well, you can repay the loan and improve your credit situation without making a shift in your social repute, whatsoever. Whether you are borrowing a secured loan or an unsecured loan without a guarantor, you should be able to repay the entire debt as agreed with the lender. Timely repayments help in building and maintaining your credit score.