Applying for a loan in the UK can be difficult for those of us with a less than perfect credit rating. We may find ourselves turned away by lenders and unsure of where to turn next. In these circumstances, using a broker could save you time, and avoid further damage to your credit score. There are two options, in this case, an applicant can either decide for a guarantor loan or no guarantor loan.
What are Guarantor Loans?
Guarantor loans are loans in which the lender will agree to provide the finance to a customer, provided that there is a third party that will agree to pay back the loan, should the customer fail to do so. The guarantor signs to confirm they are prepared to do this, but the borrower themselves are still expected to keep up their repayments.
Guarantor loans create a win-win scenario for lenders, where even if the customer fails to meet their obligations, the lender will still likely get paid back from the guarantor. This gives them the confidence to lend, comfortable in the knowledge that they have a higher possibility of recouping their money.
A guarantor is often a parent or relative, a kind friend, or possibly a work colleague who wants to help someone close to them become financially stable. Being a guarantor is generally considered a selfless thing to do. The guarantor doesn’t usually stand to gain anything from doing it other than peace of mind regarding someone they care about.
Pros
Having a guarantor loan can have a significant impact on a person’s finances, positive of course. That way an applicant would be able to make his home or car loan repayments on time. At the same time, it adds to the overall security of all parties. Furthermore, the applicant will not need to make a big down payment, which is a pretty useful thing, you will agree.
Cons
If repayments are not made on time, both an applicant and a guarantor can face severe consequences. Moreover, a lender could even sue an application. In some circumstances, the lender can even sue the guarantor. Besides, your guarantor will have limited options for further loans independently from the applicant’s case. If an applicant is not careful, both he and the guarantor can find themselves in big trouble.
Why would someone not want to accept a Guarantor Loan?
Most unsecured loans in the UK do not require a guarantor. Such loans are usually reserved for those with a fairer credit score. Having the safety net of a guarantor is what persuades the lender to agree to lend. However, many borrowers don’t want a loan with a guarantor. Whilst sometimes we may not have a choice, and guarantor loans are an effective way to gain a lender’s trust and get approved for the credit they need, some people would often rather go without.
Perhaps it’s pride, or the borrower wants to stand on their own two feet and not include anyone else in their financial affairs. After all, our finances are private, and even including a loved one or trusted colleague in our financial problems can be embarrassing and tough for many people to do. Some of us may not even have a potential guarantor we can turn to.
No Guarantor Loans
More and more people with bad credit are looking for loans without a guarantor for the reasons listed above. Guarantor loans are worth considering though when you have no other options. In fact, we match many customers to lenders who offer this service on a regular basis, but we also try to match our customers with loans without a guarantor from our panel of trusted lenders.
Pros
- Not a Lot of Documentation
Thankfully, when applying for a no guarantor loan, a person will not be required to fill too many documentations. At the same time, all of it can be done online. Some of the things that will be required of the applicant are documents that provide your income, identity, and address. Since there are no guarantors, in this case, all the information regarding that will not be needed.
- A Wide Array of Choice
Alongside there is no need for too much documentation for this process, you’ll be happy to hear that there are a lot of options when it comes to choosing available unsecured loans. Naturally, the more choice you have, you have an increased chance of selecting the best one.
Cons
- Potential Penalties
As you can presume, not all of the lenders work the same way. Every one of them has their way of doing things. Some of them could even charge an applicant in case the loan paid before the deadline. At the same time, some of the lenders will not do that. Since this is the case, we would recommend a thorough studying of the deal an application is about to sign.
- Potential Danger to Credit Score
Even though any of the applicant’s assets or valuables are not at any risk if repayments are made on time, there is a potential danger for the credit score. In case an applicant fails to make repayments on time, it could mean that the credit score of that person is completely ruined. This means that the question of loans in the future is up in the air.
How can BadCreditSite.co.uk help me obtain a no guarantor loan?
As a broker, our aim is to match customers with the right lender. It’s important for us to stress that we cannot always help everyone obtain the loan they need. Sometimes we will be unable to find a match, as none of the lenders we work with may match your criteria or vice versa.
Using our software, we will submit your application to a number of relevant lenders, some of which may return with an offer. To apply, just fill in our online application form. If your application is accepted, or we find a suitable match, then you will be presented with a link to the lender’s website where you can complete your application.
The lender will always have the final say on whether or not you are approved, but to begin the process and find out what your options are, then please feel free to use our service to explore your options.
Our website is free to use, and it also doesn’t impact your credit score in any way. You’re also under no obligation to continue with a lender, but if you do, please note that the lender will certainly carry out a hard credit check on you, before the final decision is made.
