Guarantee loans usually come in different forms. While it is true that a guarantor loan can enhance the chances of obtaining an unsecured loan despite having poor credit score, you might find it tough to locate the best guarantor. If you are not successful in finding out a guarantor, you can rely on personal loans which are given to people with bad credit and where no guarantor is needed.
No guarantor loans – What does this mean?
When an individual takes out a guarantor loan, it is the duty of the guarantor to offer an option for the lender to be surer that the loan amount will definitely be repaid on time. Risk management is the key for lending institutions. Whenever you are able to depend on a guarantor, this means that the lender will have to charge lower rates since the risk associated becomes lesser.
Hence, you can well understand that the bad credit loan that you borrow with no guarantor will definitely have a high APR. You will be rather surprised to know that the percentage of rates for a guarantor loan is around 40-50% and therefore the rates on loans with no guarantor will range from 70%.
Is it a bad thing to not provide a guarantor?
If you think that your only option is to take out a guarantor loan, you shouldn’t stop yourself from contrasting rates from several lenders so that you can make the best choice. In case you prefer a low cost loan and you don’t mind pleading a family friend to work as a guarantor, you will definitely have more choice. But what if you are not able to find out a guarantor? Will that mean that you will pay more for a personal loan that’s meant for poor credit?
Making the best choice by comparing loans
With the introduction of new style personal loan, poor credit lenders are seeking help of technology to let them assess to lending risks of lending to a borrower like you. Guarantor lending institutions aren’t offered to risk lenders and hence the rate you pay is a one-price fits all solution. So, if a lender has denied you from getting a loan, here is what you can do.
- Consider getting a friend as guarantor and you may even receive quotes
- You may even make an enquiry for no guarantor loan and find out if there are lenders who can help you
- Compare both quotes and judge the one which suits your current situation
Hence, if you’re not getting a guarantor, you need not worry as there are no guarantor loans which are offered to people with poor credit. The only thing to take into account is that the rates are outrageously high and that you have to repay on time.