Bad credit loans, no guarantor explained
Written by Robert Bester, Consumer Finance Expert Robert has been a writer for six years, specialising in consumer finance and the UK lending market. Concentrating on consumer credit products, Robert writes informative articles that help customers manage their personal finances efficiently.
17th January 2022
4 minute read
Getting a bad credit loan with no guarantor means you’ll be borrowing money based on your own credit score and lending history, rather than relying on someone else to be a guarantor. This will mean:
- You might have a higher interest rate making it more expensive to repay
- You may have to use your home as collateral if you want to borrow more
- You are more likely to be rejected by major lenders
If you have a bad credit score but still want to borrow money, you will find yourself having to do a bit more research to discover which loan type would be the best for you. While some might opt for a guarantor loan to get a better deal, you may want to still borrow on your own with no guarantor instead.
The reason for this might be that you don’t want to burden a friend or family member with more debt, or you simply don’t have anyone who can act as a guarantor on your behalf. In this circumstance, it’s worth exploring options that require no guarantor such as a bad credit loan.
What are loans without guarantors?
A guarantor is a close friend or relative who will take responsibility for a loan if you as the borrower are unable to keep paying it.
Therefore, a loan without a guarantor is actually most types of loans. They might include personal loans, bad credit loans, secured loans, home improvements loans, car finance loans and short-term loans.
In some cases, if you choose not to have a guarantor but have a bad credit score, you will have to look for lenders who will accept customers with a low credit rating. This also means the loan will usually have a higher interest rate than most personal loans so you may end up paying back more in interest.
Am I eligible for a no guarantor loan?
You could be eligible for a no guarantor loan, as long as you meet the minimum criteria for acceptance with the lender you are applying through. This may take into account the following:
- Current credit score
- Previous credit history
- Current and previous addresses
- Employment status
- Annual income
- Debt-to-income ratio
- Existing monthly expenses
You will need to be as accurate as possible in your application as you will have to go through a credit check to be accepted. This is the lender ensuring you meet the minimum criteria and they are happy you can repay the loan given your circumstances. Unfortunately, you will never find a loan with no credit check, even if you choose a bad credit loan with no guarantor.
If you have failed to repay previous debts, have a CCJ or have been declared bankrupt, you may find it a lot more difficult to be accepted for credit. Therefore, it’s always worth checking your eligibility prior to applying for any form of borrowing, as this will protect you from damaging your credit score with an unnecessary rejection.
Using an eligibility checker such as moneymatcher will give you a clear indication of which no guarantor loans you are most likely to be accepted for, all without affecting your credit score. Find out more about checking your eligibility here.
Should I apply for a loan without a guarantor?
It’s always worth doing your research and seeing whether a no guarantor loan is the best option for you. If you have already checked your eligibility and it is showing you’re likely to be accepted for a bad credit loan, short-term loan or personal loan you should be able to go ahead and apply. Make sure you’ve followed the steps below:
How to apply for a no guarantor loan
- Research types of loans – along with reading this article, look through our loan guides to find out more about what types of loans are available
- Decide how much you want to borrow – have an idea in your head exactly how much you need to borrow, based on what you plan to do with the money. Try not to borrow any more money than you need
- Decide how long you would like to borrow for – once you have a figure in mind, work out how long it would potentially take for you to pay it off, based on how much you have spare per month to put towards the loan
- Check your credit report – find out more about your credit history and if there are any quick fixes you can make to improve your credit score
- Use an eligibility checker – fill out a tool such as moneymatcher to help you narrow down your search for a no guarantor loan
- Choose a loan offer out of the ones available – use your moneymatcher results as a shortlist for what you want to apply for and then choose the best loan deal for you
- Apply for the loan – fill in your personal details and apply for the no guarantor loan, making sure all your details are correct before you click submit
How much can I borrow?
This will all depend on the loan deal you’ve found and the lenders that are likely to accept you as a customer. It might also depend on the type of loan you go for, as a secured loan will allow you to borrow a lot more money, but you will have to use your home as collateral, putting you at risk.
Remember that the more you borrow, the more you will have to pay back through interest payments. Therefore, you should always stick to the amount you need, rather than borrowing too much and struggling to pay it back.
Start comparing bad credit loans
Always use moneymatcher to narrow down your search and see if you’re eligible before applying. Alternatively, take a look at our Bad Credit Loans page to find out more information and read relevant guides and FAQs before making a final decision.