If you’ve struggled in the past with finding yourself a guarantor to no avail due to your poor credit score, then you might be wondering what your options are when looking for a loan to suit your needs. Whether you need a mortgage or a short-term loan, there are plenty of available options out there, designed specifically for you; and in this article, we will discuss what your options are for securing loans without a guarantor.
What is a Guarantor?
A guarantor is a third party in your loan agreement, who will agree with your lender to ensure that you will keep up with your loan repayments. However, if you fail to pay back your debt, your guarantor also agrees to step in and pay your loan instalment or the remaining balance of the loan for you.
Although having a guarantor can be great for most borrowers, generally being a guarantor and taking out a guarantor loan does pose a considerable financial risk for others, especially if the borrower fails to keep up with their side of the loan terms. As if the borrower fails to pay not only will the guarantor end up having to pay the loan, but also runs the risk of having bad credit and because of it.
Who Can Be a Guarantor?
Generally, almost anyone you know can be a guarantor for you; they don’t have to be a family member or a partner. To act as a guarantor for someone all you have to do is be over the age of 18, have a regular income, be in possession of a bank account, a good credit rating as well as being able to pass a credit check and be in agreement with the terms and conditions of the loan.
Why is having one so Important for some lenders?
The reason why some lenders may require a guarantor is that they want to ensure that they’ll receive the loan amount back that they loaned you, regardless of who ends up making the repayments, whether it’s you or your guarantor. It can also help the borrower to acquire a more substantial loan amount, from some loan companies.
Therefore, guarantor loans are an available option for those who have a thin file or a bad credit history, and might otherwise be rejected for more traditional forms of credit. However, as mentioned previously, because there is always a certain amount of risk involved with being a guarantor, many applicants do struggle to find someone who is willing to act as a guarantor for them, which does pose a problem.
What Loans Can I get Without a Guarantor?
There are many available options for those who cannot or do not have anyone to act as a guarantor for them. Many short-term, unsecured credit options won’t require you to provide a guarantor when you apply, although you can expect that the interest rate can tend to be just a little bit higher than they would with a guarantor loan, but this will ensure that you don’t have to provide a third party and that you will be able to be solely responsible for your loan.
Generally, most types of unsecured loans that are available you should be able to get without a guarantor, as long as the lender doesn’t specify that they require applicants with poor credit history to provide themselves with a guarantor; otherwise, you should be able to find yourself an unsecured loan without a guarantor.
Alternatively, you can apply for a secured loan, but it will require you to provide an asset, such as a car or property for you to secure the loan against. While this can be an excellent option for some, for others it can be risky, and it’s not an option for those who don’t have an asset to offer as collateral.
Can I still Get a Loan Without the need for a Guarantor if I have Bad Credit?
Yes, there are plenty of credit options available to those who have bad credit, and there are plenty of lenders who do understand the fact that customers with bad credit still have the need to borrow money. In fact, some lenders offer what is called a ‘bad credit loan’ which is loan available to those who may have a poor credit report that would otherwise mean that they might be rejected for credit or require you to pay a higher rate of interest. Bad Credit Loans don't require you to provide a guarantor but may require you to pay a higher interest rate. However, there’s no need to fret as there are also many different available loans and other available options for people with bad credit that don’t need a guarantor, such as:
- A payday loan
- A peer to peer loan
- A secured loan
- A credit card
In conclusion, guarantor loans can be a helpful option for some of those who have non-existent or poor credit; however, they aren’t the only option available for those who are currently suffering from a bad credit report.
Here at Multi Month Loans we provide a range of loan options that are available to customers from all different credit backgrounds, and we consider every applicant fairly, irrespective of their credit history and circumstances, providing loans without any need for a guarantor. So, if you’re looking to borrow money with your bad credit, then why not fill out an application form today and see if you could be accepted for a loan from £300 to £5,000 today!
If you enjoyed reading this, you might also like: