Why No Guarantor Loans Are a Smart Choice for Financial Recovery

When there is an emergency, you cannot wait too long to have your loan application signed off on. Even though you need money for an emergency purpose, your lender will check your credit report to know your past payment behaviour. It is part of an affordability check without which I is quite hard to get the nod for a loan.

If your credit report is not up to scratch, you will certainly face some complications such as:

  • Your lender will restrict the loan amount.
  • You will be charged high interest rates
  • You will be required to settle the whole amount in a lump sum.
  • If the loan amount is big, you will be asked to arrange a guarantor.

Though a guarantor is an option to speed up your application process, hardy will anyone come round to act as a guarantor after knowing that they will lose their credit points if you make a default. Here comes in no guarantor loans from a direct lender.

Loans without a guarantor run a soft credit check

A credit check, which leaves search footprints, often worries borrowers with bad credit score. One single inquiry can ruin your credit score. Moreover, it is not easy to bear the impact of hard inquiries for until two years. But there are a few loans that do not involve a hard credit check. No guarantor loans are one of them.

Your lender will make “soft inquiries” which means they will not show up on your credit file and therefore cannot be visible by other lenders. Your credit score will remain the same. You will have to shop around a lender who does not run a hard credit check.

No guarantor loans can help tide you over during unemployment

Jobs are never permanent. You may be redundant at any time. You should have savings to meet your expenses when you are out of work. Unfortunately, they do not last for a long time. Thankfully, you can get unemployment benefits. They will help tide you over unless you land a new job, but they cannot be sufficient to meet any unexpected expenses.

You can take out an unemployed loan, also called a non-guarantor loan, to meet them. Your benefits will serve as your income. You can show any passive income sources, if any, to prove you can repay the debt. You simply need to prove your repaying capacity and the loan will be approved.

Loans without a guarantor are available despite a bad credit rating

In the event of a very poor credit rating, it can be quite difficult to get the nod for a loan. most of the lenders do not accept applications from very poor credit borrowers, and if they do, they expect you to arrange a guarantor with a good credit score.

  • Despite a guarantor, you will get a very small amount of money.
  • Interest rates will be very high.
  • No flexible payment plans will be offered.

A few lenders are out there who may give you the nod despite a very poor credit file without any guarantor requirement, but there are a few conditions to follow:

  • Your credit score should not be too bad. Make sure that you ask your lender about the bare minimum score they accept.
  • You should have a satisfied CCJ.
  • It must have been over a year since you declared bankruptcy.
  • The purpose of borrowing money must be urgent.

Bear in mind that the interest rates for very bad credit loans from direct lenders will be quite high. You should carefully figure out your repaying capacity. Research properly to ensure that you are borrowing money from a trusted lender.

There are some lenders who can trap you in debt. They may charge extortionately high interest rates to make money. These practices are mainly common by unethical and non-registered lenders.

The benefits of no guarantor loans

Here are the benefits of these loans:

  • You do not need to have someone to take guarantee for the payments on your behalf. The absence of a guarantor speeds up the application process.
  • You do not need to put down collateral even if your credit report is not up to scratch.
  • You can use these loans for a variety of reasons. They are most commonly ideal for funding emergency expenses.
  • The process of non-guarantor loans is faster than guarantor loans because they involve less formality. You will get money directly in your account almost within the day you apply for the loan. It usually does not take more than 24 hours to close the application.

The drawbacks of loans without guarantor

Here are the drawbacks of on-guarantor loans:

  • These loans carry higher interest rates than guarantor loans. Interest rates can be even higher if your credit score is less than perfect.
  • Lenders may turn down your application if they suspect about your repaying capacity.
  • Chances for getting the nod for these unsecured loans are very low when your credit rating is very bad.
  • You will have to repay the debt in one go. If you fail, interest penalties will be added to your account.
  • Flexible payment plans are not offered to bad credit borrowers. Your lender may reduce the length of your repayment term.

To wrap up

Loans without a guarantor can help you meet your emergency expenses smoothly. You do not need to embroil yourself searching for a guarantor, which helps speed up the application process.

Moreover, you do not have to put down your valuable asset as collateral, so there is no risk of losing it in case of a default, but late payment fees will be charged and interest will accrue until you settle the overdue balance.

You should carefully understand the consequences of non-payments because their implications are too bad and last for a very long period.

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