You may be considering a no-guarantor loan to maintain healthy relationships and meet your needs independently. You can use it for any short-term needs, such as car repairs, urgent educational costs and medications. However, before using the loan, you must understand the eligibility and affordability requirements. It helps you boost the chances of qualifying for the loan and repay without worries.
Most individuals face loan rejections due to incomplete form details or making multiple applications at once. All these aspects affect the chances of loan approval. Therefore, you must avoid such things while seeking loans without a guarantor. The blog discusses ways to get an instant loan without rejection.
What does a no guarantor loan imply?
A no-guarantor loan is a financial option that helps one qualify for a loan without a third party or a guarantor. A guarantor is someone who provides their credit score and earnings to help the primary borrower get the loan.
However, individuals with regular pay, well-managed bills, and no heavy debt may qualify. Responsible financial behaviour reveals a person’s ability to pay dues on time. Thus, they may get loans with no guarantor from a direct lender. Still, interest rates remain more competitive than a guarantor-based loan.
You may get up to £ 10,000 for 12 months, depending on your needs, credit score, and income. Missing or paying late may mean penalties and high interest.
6 Ways to get a no guarantor loan responsibly
Before borrowing, determine whether a loan without a guarantor is the right choice. It is only beneficial if you don’t want to involve another person to accomplish your personal financial goals. Here are some strategies to get a no-guarantor loan responsibly:
Explore other cheaper options
Check small personal loans, short-term loans, quick loans, etc., before choosing a no guarantor loan. It is an expensive way to meet your requirements. If you need a lower amount, for example, £5000, short-term loans with flexible repayments may help. You can also consider secured loan options to qualify for bad credit and cheaper terms.
| No guarantor loans | Short-term loans |
| Ideal for individuals who don’t want to rely on someone else for payments | Ideal for individuals seeking small cash help to meet immediate purposes individually |
| Individuals with good credit history and confident about payments may qualify. | Choose it if you are confident of paying the dues with the next paycheck and cannot delay the deal. |
| The interest rates on these loans remain 5.8%-1700% APR for high-cost loan providers. | The interest rates on these remain 39.9% to over 91% APR. |
Assess your affordability
If you feel like a no guarantor loan is the right option for you, analyse your affordability. Compare your monthly pay with the expenses you incur per month. How much are you left with each month, and how much do you comfortably pay for loan repayment out of that?
For example, if your monthly income is £5000 and £3000 of monthly payments, you can afford a £10000 loan. However, your affordable range is £400-£800 per month. So, you should calculate your affordability accordingly to make sure your borrowing amount stays within your budget.
Prepare the loan repayment budget
Every new loan requires you to re-adjust your monthly living expenses. If you don’t do so, you may skip loan repayments. It may get trickier further to clear the dues. Identify how this new loan may affect other important payments.
Try to expand your income if you can take on part-time jobs. It may help you support additional payments without burdening your basic budget. Also, check what debts you refinance to lower interest rates.
It reduces your liabilities automatically and helps you save extra money to clear the loan. Also, check the unnecessary spending that you make monthly. Try to stop this for a while until you repay the loan. It may prove helpful in avoiding any late fees or loan penalties.
You may not know the final amount or monthly repayments by now. However, you can know the approximates by pre-qualifying. Save more than the number that you get by using the loan calculator or pre-qualifying. It may prove helpful, and you would not have to panic at the last moment.
Borrow a flexible amount
Understanding the basic cost of achieving a purpose helps you borrow rightly. For example, it takes around £500-£617 to repair a car in the UK on average. However, these costs may escalate to £5000 for major engine issues or structural damage. It is because most car repairs include replacement costs (£1500-£5000) or more.
Therefore, identify how much it costs to achieve a personal life cash need. Accordingly, check how much you can afford to repay. Next, borrow an amount that aligns well with your budget, income and requirements. Borrowing less also means paying less interest overall. However, you just need to make sure that you don’t miss the payment.
Check the costs you are liable for
Before you consent to the final agreement that you receive by mail, read the terms carefully. Inspect every small cost mentioned and make sure you know everything about why the loan company charged it. If confused, ask the creditor for details about that.
Never agree to a loan agreement that seems confusing. Especially, keep an eye out for costs like early repayment fees, missed repayment charges, overpayment fees, etc.
These hidden costs may increase the amount that you are due on the loan. It is better to know about a few terms like APR, interest, late fee, and prepayment penalty before applying. It will help you avoid paying more unnecessarily on the loan.
Use the right account to pay dues
One usually commits the mistake of choosing an inactive or unused bank account to pay the dues. However, adding that account may immediately lead to loan rejection. Every loan provider checks your current bank statements of the salaried account.
Thus, make sure to add only that account for the repayments. Next, set direct debits or autopay to never miss a payment. It ensures timely payments without any worries of attracting legal fees. Make sure that you set a payment date on which you generally receive your monthly salary.
Bottom line
These are some ways to improve your chances of getting a no guarantor loan in the UK. Identify other loans or finance options before choosing this loan. It is a costly alternative to many personal loans.
Hence, pick it only if you want to deal with the loan payments alone and don’t find a better option. Next, compare the loan terms like APR, interest and total amount to pay before applying. Check for hidden costs and document requirements.
Also read what are the alternatives to quick loan in ireland.
