Bad Credit Loans Without A Guarantor – How Do They Work?
Do you need a bad credit loan without a guarantor? You might be surprised to hear this, but you still might be able to get a bad credit loan without having to find a guarantor, depending on your circumstances.
On this page, we look at what options are available for borrowers with a low credit score, seeking unsecured personal loans with no guarantor.
What are no guarantor loans?
With a guarantor loan, someone else agrees to cover any monthly repayment you're due to make if you're not able to do so. No guarantor loans are the opposite – you’re applying by yourself and solely liable for repayments.
Borrowers often choose to apply for a guarantor loan because they're concerned that their bad credit rating means that lenders will be likely to decline their request for finance.
What if you default on a guarantor loan?
If you default on a guarantor loan, your guarantor becomes liable for the balance of what's left on your loan. They may be asked to pay it back in instalments or, depending on the lender's terms and conditions, the entire balance might be repayable on demand.
Applications for guarantor loans are often supported by a friend or family member under the age of 75.
What if you default on a loan without a guarantor?
Defaulting will mean that you alone are liable for the sums borrowed. You might be asked to pay it back in instalments or the entire balance may be demanded. All these will be outlined in the terms and conditions of your loan. Defaulting can severely damage your credit score and the ability to borrow money or obtain a credit of any sort in the future.
What is a bad credit loan?
A bad credit loan is a type of short term high-cost loan for borrowers with less than perfect credit histories. It is offered to qualifying borrowers for between £100 and £10,000. People borrowing between £1,001 and £10,000 can repay over a period of between three months and five years. For amounts of £1,000 or less, loans are repayable over three, six, or twelve months.
Are these payday loans?
Poor or bad credit loans are not payday loans. With these, borrowers repay their payday loans in one go around a month after they've received the money in their bank account. Some payday lenders may offer up to 35 days to settle in full.
Can I get a loan with bad credit and no guarantor?
It may be possible to do so, depending on your circumstances. While there are direct lenders who require a borrower to provide them with a guarantor before they’ll consider an application for finance, there are many more bad credit lenders who don't. It may be possible to find a direct lender who may be able to approve a loan for very bad credit without a guarantor.
If you need the money and you really don't want to have a guarantor, you may wish to try for a standard bad credit loan instead.
Can I get a loan without a credit check from a direct lender?
In short – no. The long answer is that you can check your chances of being approved without a full credit check, but to apply for a loan with an FCA authorised and regulated lender you will have to pass a hard credit check. It is part of the affordability checks lenders are required to perform.
Why apply with a broker like Little Loans?
Brokers work with a panel of lenders, many of whom are happy to work with borrowers with a low credit score. When a broker accepts a new lender to their panel, the broker asks the lender to tell them about the types of loans they prefer to fund, and the types of borrowers they're more likely to approve.
When you apply for a loan with Little Loans, this is how the process works:
- Assess your affordability and chances with our Quick Check tool
- Fill out our application form - provide them with all the details (including how much you get paid each month by your employer)
- We’ll then approach each of our partnered lenders in turn. Each lender contacted performs a soft credit search.
- Soft searches can't be seen by other lenders and they don't affect your credit score.
- We will then re-direct you to the website of the first lender who indicates that they would like you to make a full application (if they find one).
- Fill in the lender's application form in full. The lender will perform a hard credit search (with your permission) and then make an instant decision on whether they'll approve your loan request.
If your loan request is accepted and you receive an offer, make sure that you feel comfortable with the following four factors before you decide to proceed:
- Monthly repayments - how much you'll pay back each month.
- Interest rates - the fixed rate you pay on your loan and how much interest you'll pay in total on your loan. The rate may be higher than the representative APR indicated on the lender's website.
- Fees - check to see if there are any other charges that you may have to pay to the lender.
- Terms and conditions of the credit agreement.
If you want to go ahead, let the lender know by pressing the appropriate button on their website and the cash will be sent to your bank account within minutes*.
How to get a loan with very bad credit in the UK?
You can apply for a very bad credit loan direct from a lender or via a broker without the need of a guarantor.
Brokers do not actually lend money - what they do is match the right borrower to the right lender. Brokers offer two big advantages to customers seeking a loan for bad credit:
- brokers use the information that borrowers provide them with on their application form to find the lenders most likely to approve a borrower's request, and
- there'll only ever be a maximum of one hard credit search which will be run on a borrower. And that's only if a borrower makes a complete finance application and they give permission to the lender they've been referred to carry out the hard search.
This second advantage is particularly important. If you approach a number of lenders direct instead of going through a broker, each lender will carry out a hard search on you when you've:
- filled in all your details on the application form and
- given your permission to the lender to run the search.
The more hard searches a lender sees on your report in a short space of time, the less likely you are to be accepted for a loan. That's because a lender might think you're struggling to manage your finances. Even worse, your credit rating will also be adversely affected.
What can you use a no guarantor loan for?
There really are no restrictions on what you can use the money for. Usually, bad credit loans are used to cover an unexpected or emergency expense when there are no other options available. You can use them to fix an appliance that has broken unexpectedly, a costly car repair to help you get back on the road and such.
How safe are bad credit loans with no guarantor?
They are safe as long as you apply to a lender or a broker who is authorised and regulated by the Financial Conduct Authority. All lenders on our panel are authorised and regulated and specialise in offering borrowers a safe option when you need money the most.
We never charge any money upfront or any fees. We will never call you asking for payment either. You should never pay any upfront fees for a loan or send any money in return for a loan – most likely this is a scam and to be avoided. A scammer may also ask for you to purchase vouchers on their behalf in order to secure a loan. These are also to be avoided.
Making a responsible financial choice
Please only apply for a no guarantor loan if you are certain that you can comfortably meet all of the monthly repayments in full and on time. Concerned about debt? You may benefit from contacting one of the following organisations - StepChange, PayPlan, National Debtline, the Debt Advice Foundation, the Money Advice Service, and Citizens Advice.
Little Loans is authorised and regulated by the Financial Conduct Authority.
Representative Example: Amount of credit: £1200 for 18 months at £90.46 per month. Total amount repayable of £1628.28. Interest: £428.28. Interest rate: 49.9% pa (variable). 49.9% APR Representative. We’re a fully regulated and authorised credit broker and not a lender