Guarantor loans seem to be everywhere at the moment. However, if you don’t have someone who is willing to be your guarantor with a lender then you can still borrow. The loans market in the UK offers many different ways to borrow, no matter what your credit score – and a guarantor is not essential to the process.
Do I need a guarantor to get a loan?
The short answer is: no. Guarantor loans are a relatively new type of lending product when compared to many of the loans that are on the market today. The concept behind guarantor loans is not new though. The idea is that someone who is a trusted friend or family member guarantees to the lender that they will take over repayment of a loan if the original borrower is not able to continue to make payments. This can be particularly useful for borrowers who don’t have a credit history, or who have a very low credit score. With a guarantor in place lenders are more likely to approve an application to borrow and may even be willing to lend more. However, there can also be disadvantages to guarantor loans. For example, if your guarantor doesn’t cover the repayments the lender can still take action against you. Plus, interest rates on guarantor loans can be high.
How to get a loan without a guarantor
What does it actually mean to get a loan without a guarantor? Essentially, you’re just making the application on your own. So, the lender will focus solely on your financial history, credit file, income etc when making a decision about whether or not to approve your application. This can make the whole process much simpler and means that you’ll have a good idea from the start about which type of loans you’re likely to be eligible for. If you’re looking to get a loan without a guarantor then you’ll need to do the following:
- Check your credit score. Lenders will look at your credit history to see whether you are a good or bad borrowing risk. If you have a low credit score it doesn’t necessarily mean that you can’t borrow, you’ll just need to find the right lender for your situation.
- Make a sensible application. Factors such as your income will be taken into account when you’re applying for a loan without a guarantor – the more reasonable an application you make the more likely you are to be approved.
- Check that the loan will be affordable for you. Affordability is high on the list of criteria for most lenders today – this simply means ensuring that you’ll be able to make the repayments on the loan, especially as there is no guarantor back up. You can start this process yourself by looking at your income and outgoings – will there be enough left at the end of the month to comfortably make repayments on the loan or are you going to end up short?
No guarantor loans
Many lenders today offer no guarantor loans to borrowers across a very wide range of different demographics. The options for guarantor loans include:
- Unsecured personal loans. Lots of banks and building societies offer unsecured personal loans from several hundred pounds up to thousands. You will usually need a good credit score to be approved. Personal loans tend to be repayable over six months or more.
- Payday loans. If you’re looking for short-term borrowing a payday loan could be ideal. This type of loan is for a smaller amount and will usually be repaid within the month.
- Homeowner loans. You don’t need to have a guarantor to borrow with a homeowner loan either. If you’re a property owner, whatever you borrow is secured against the property. So, if you’re not able to make the repayments as agreed the lender can force the sale of the property to get its money back. Homeowner loans are particularly useful if you don’t have a great credit score, as they provide security for a lender i.e. another way for the lender to get their money back if you’re not able to repay.
Is it possible to get a loan with bad credit and no guarantor?
Yes. It’s important to note that you will have fewer options if you have bad credit and don’t have a guarantor but there are still options out there. For example, payday lenders loan smaller amounts that can be covered by your monthly income. As a result, they don’t usually require a guarantor and a bad credit score won’t make a difference to your application.
If you’re looking to borrow but you don’t have a guarantor you can still be successful. The key is to find the right lender, as well as the right type of loan for you.