Has your loan application been rejected by a bank simply because you don't have a guarantor? We know how frustrating it can get, especially when you need cash urgently. For most people, being approved for a loan is complicated. This is because big financial institutions often ask for a cosigner. You can find a lender who is willing to give you a loan without a guarantor. Though this may seem impossible, doing your research can help you find a solution to all your money problems. Read on.
Who is a guarantor, and how can they help?Before we discuss how a loan without a guarantor works, we must start by informing you who a guarantor is and what role they play in the loan application process. A guarantor, also known as a cosigner, is a second party that is responsible for paying back your loan if you cannot make payments on time. Banks prefer working with reliable people who can make payments as agreed. That is why they ask for a cosigner when you apply for a loan.
When you don't have a good credit history or have a low income, your loan application may be rejected simply because of lacking backup in the form of a cosigner. If you sign for a loan when you have a cosigner, they help you make payments on your behalf. Getting a loan with a cosigner enables you to adopt the profile of the second party. This increases your chances of acquiring the loan since the bank does not consider you a high risk anymore. You can also get better rates and reasonable loan terms when your loan is backed up by a cosigner.
What is a loan without a guarantor, and why should you consider one?
As the name suggests, a loan without a guarantor does not involve any second parties. Most people often assume that loans without guarantors are payday loans. Though this is an example of a loan without a cosigner, it is not the only example. Other forms of loans without guarantors include peer to peer loans, personal loans as well as logbook loans.
Most of the loans without guarantors are marketed to borrowers that do not have the best credit history. Since the options are diverse, some of them come with high APRs. You should take your time to compare loans without guarantors for you to choose one that will not be too expensive.
Though having a guarantor when applying for a loan can make things easier for you, some situations can make it hard for you to get a cosigner for your loan. For instance, it is not easy to find someone who is willing to cosign with you. Cosigning a loan is a big commitment since you put a lot of pressure on the guarantor as they are entitled to pay the loan if you cannot afford it. For this reason, not everyone is willing to act as a guarantor for a loan. If you are in such a situation, you may need to consider applying for a loan that does not require a cosigner.
Cosigning a loan can also hurt the credit history of the guarantor. It can ruin relationships between borrowers and guarantors. If you don't want such risks, then applying for a loan without a cosigner makes more sense. If you don't have the details of the person you want as your guarantor, the application process of the loan can also be difficult since you have to keep on going back and forth, trying to get every information needed about them.
Before you apply for a loan without a cosigner, you should ask yourself if you can afford to make payments every month on your own. You should also be keen on the conditions and terms of the loan to ascertain that you are comfortable with them. Think of the amount that you wish to borrow and have a strategy in mind of how you should pay it back. Also, consider the urgency of the loan and assess if this is the best option for you. Once you have factored in all these things, it is time to proceed with the application process.
How to apply for a loan without a cosigner
The process of applying for such a loan is easier than a loan with a guarantor since you don't need to access details of a second party. Choosing a direct lender such as Cashfloat also helps you enjoy the process since every step is straightforward. The lender offers flexible loan terms even when your credit history is not the best. You will not be subjected to lengthy application forms that give you more stress when you have money problems.
For you to get the loan, start by filling in relevant information such as your bank details, address, and employment history. You should at least have a source of income and be of age for you to qualify for the loan. Being a UK resident also gives you an added advantage when applying for a no-guarantor loan. Once you have submitted your application online, wait for at least one business day for the lender to get back to you.
Most direct lenders of such loans give you an offer before they allow you to hold on to the cash. You may be asked to sign a note before the money is deposited into your bank account. You can use the no guarantor loan to pay for any expense you have. Once you have handled your emergency, start making repayments a soon as you can. The early you pay it, the easier it is to avoid penalties.
If you are still having problems getting approved for a no guarantor loan, consider borrowing a small amount. You can use a loan calculator to assess how much you should borrow, depending on what you earn, as well as your financial situation. Diversifying your search can also increase your chances of getting approved. All the best!
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