When you’re applying for a loan, there’s a list of eligibility requirements that you need to meet to be successful with any given lender. Some lenders mightask you to have a guarantor before they are happy to give you a loan. This isn’t always possible for borrowersbut that’s no reason not to look for loans that don’t require a guarantor.
In this article, the BestUnsecuredLoans team explain why some lenders need a guarantor and why others don’t, what a no guarantor loan is, who they are for, and how you can get one.
What is a guarantor?
A guarantor is somebody who pays off the rest of your loan repayments if you can’t. Lenders use guarantors to give them more confidence that they will get all of the money they lend you back.
Your guarantor signs a contract with your lender that says that they will take on the responsibility of paying the rest of the loan instead of you if you are unable to make the payments. This means that they also need to go through the same credit and affordability checks as you as a part of the loan application process.
What are the eligibility criteria that your guarantor must meet? Usually, your guarantor must:
- Be aged between 18 and 75,
- Have a good credit score and history, and,
- Be a homeowner (this is the case for many, but not all, lenders).
These are just some general guidelines on what lenders look for in a guarantor.
Naturally, each lender will have their own criteria for what they’re looking for from both you and your guarantor. It’s important to remember that many lenders don’t share their eligibility criteria on their websites which makes it difficult for borrowers to find the right loan company for them even if they do have a guarantor.
What is a no guarantor loan?
No guarantor loans are exactly as they sound – short-term loans which don’t require you to have a guarantor. There are many reasons why borrowers can’t find a suitable guarantor. Perhaps your family are unable to help you out financially or you simply may not want to ask them.
Many borrowers have difficulty finding a guarantor because, for the guarantor, it’s quite a large commitment that they may need to take on if you can’t meet the repayments. Not only does this mean that they have to potentially put their own money on the line but they also have to risk their own credit score in the process.
No guarantor loans do away with this requirement but there is a trade-off involved for you as the borrower. Typically, you need a slightly higher credit score than usual to apply for a no guarantor loan. If a lender is happy and they think you’ll be able to make the repayments without the help of a guarantor, they’ll lend you the money.
What if I have bad or no credit?
Many no guarantor loans, like ones you might take out from a bank or a building society, often require you to have a good credit score. However, there are now many lenders who specialise in providing loans to people who are unable to find a guarantor who have low credit scores.
You may have had a couple of financial problems in the last few years. Please don’t worry though because the specialist no guarantor bad credit loan providers understand this and they’re more interested in who you are now and your current personal and financial circumstances now. For these lenders, the past is the past and the situation today is what they’re more concerned about.
Onno guarantor bad credit loans, you may have to pay a slightly higher rate of interest on the loans you take out because your credit score is not as high as it could be.
Do no guarantor loans help build my credit?
Taking out a no guarantor loan (also known as a personal loan where you don’t need either a guarantor or to provide anything as security like a house or a car) is a great way of improving your credit score for the future.
If you’re able to pay off your no guarantor loans in full and on time, this shows any potential future lenders that you are financially responsible and that you can meet your repayments. As an added benefit, this means that, if you choose to take out any more loans further down the line, you might receive lower interest rates meaning that your loan overall is cheaper.
What you need to know about making a loan application through Best Unsecured Loans
BestUnsecuredLoans works to find people the cheapestno guarantor loans for them..
BestUnsecuredLoans is a broker and not a lender. When you make an application through us, we send the information you provide us with together with a copy of your credit report to our panel of Financial Conduct Authority-approved lenders.
The no guarantor loan providers we work with respond in seconds. Each one which says “yes” to your application tells us the deal they’re willing to offer you.
The difference with us is that, if five lenders come back wanting to lend you money, they can all see each other’s offers. The lenders then start bidding against each other for your business. One lender might say that “yes, we’ll lend you £1,000 at this interest rate” and then another lender responds to that by saying that “we’ll match the £1,000 but this is the lower interest rate we’re prepared to offer”.
Once the final bids are in, you get the cheapest no guarantor that our panel of lenders is willing to offer you. That means that you receive the finance you need on the best possible terms for you.
The whole process is done automatically and in real time. And, depending on the lender and on the type of bank account you have, the money could be with you on the very same day.
To start your application, please click here.