Instalment Loans

No Guarantor

Borrow between £100 to £5000

Personal Loans

No Guarantor

Borrow between £5000 to £25000

Representative example

Representative example: £2,000 borrowed for 24 months. Total amount repayable is £6,512.44 in 24 monthly instalments of £271.36. Interest charged is £4,512.44, interest rate 112.8% APR (variable)
Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk.

A guide to no guarantor loans

 

If you’re looking for a loan without the need for a guarantor, there are plenty of lenders and products to choose from. But as ever with borrowing cash, it pays (literally) to understand the details, do your research and think hard about whether this type of borrowing is right for your situation.

In this guide we’ll take you through the basics of no guarantor loans, so you can make a more informed decision. You can use the ‘at a glance’ list below to navigate to the section you’re most interested in first.

 

What is a no guarantor loan?

What’s a guarantor?

Is it like a ‘pay back the same month’ loan?

Will I be eligible for a no guarantor loan?

How long does an application decision take?

How quick is the money transferred?

How much can I borrow on a no guarantor loan?

Over how long can I borrow money?

How expensive is a no guarantor loan?

What happens if I miss a payment?

Can I repay early or overpay?

This is my first loan, can I still get one?

Your no guarantor loan checklist

 

What is a no guarantor loan?

This type of borrowing can be a little confusing, as aren’t most loans issued without a guarantor? Yes, it’s true, most mainstream loans and secured mortgages don’t require a third party to agree to cover your repayments, but loans with no guarantor are something a bit different. They’re designed for people with a less than perfect financial record, and for those that can’t find a friend or family member to make repayments should they default.

 

This type of funding usually takes the form of a high interest loan on a low amount, where the lender assumes a lot of risk and therefore charges more to increase their return. They’re also known as peer-to-peer loans, personal unsecured loans and logbook loans – where you borrow against your car.

 

OK, but what’s a guarantor?

Great question. A guarantor is someone who trusts you and is prepared to repay your loan if you can’t. It’s their legal responsibility is to make loan repayments if you don’t, so it’s a big commitment and one you should both be completely happy with.

 

Loans with no guarantor are quite an old concept that became almost redundant as money was readily available and cheap in the second half of the last century. However, since the recession and subsequent introduction of more restrictive lending by high street banks, this form of borrowing has seen a resurgence. Having a guarantor will usually give you access to cheaper borrowing options than without.

So, is it like a wonga loan?

Yes and no. Loans that you have to pay back at the end of the month or within a few months are similar to no guarantor loans. They’re both relatively expensive compared to more traditional methods of borrowing, and readily available online with little in the way of affordability checks. You can also typically get one just as fast as a payday borrowing.

Will I be eligible for a no guarantor loan?

Your eligibility for loans with no guarantor will differ with each provider, as each has their own acceptance criteria. Typically you’ll need to be aged between 18 and 70, have a UK bank account, not be unemployed or on benefits and have a net income of a certain amount per month – net means your income after tax.

If you have a CCJ or low financial score, you needn’t worry too much as this product is designed for your situation. That said, the lender will check for affordability – or at least they should by law, avoid any that don’t – and will still reject our application if the repayments are deemed unaffordable.

It’s very important to check the provider’s acceptance criteria BEFORE you apply, this should be available on the company’s website, or if you call them. If you don’t meet it, don’t apply for it, otherwise your financial file may be negatively affected, making it even harder for you to access funding. Some lenders do have a ‘check’ function allowing you to do a light application that gives you an indication of eligibility and doesn’t affect your file.

As ever, even if you’re eligible – before you apply ask yourself these questions:

 

– Do I really need a loan?

– How much do I actually need to borrow?

– How much can I afford to repay each week/month?

– What are the terms of the loan?

 

How long does an application decision take?

Most firms have created application forms that are as minimal as possible, allowing you to complete your request in a matter of minutes. A decision usually follows either instantly or within seconds.

couple applying for loan without a guarantor

 

How quick is the money transferred?

Again, these lenders have created quick and relatively easy access to money at high interest rates. So, expect to receive the money within 24 hours, often much sooner. But remember, from the moment you have the money, that high interest rate is being charged.

 

How much can I borrow on a no guarantor loan?

Expect to be able to borrow from £500 up to around £5,000, but again this will vary between businesses. It’s particularly important with loans with no guarantor to only borrow what you need as the interest rate will be high and any extra you take will be expensive to repay. The amount you’re offered will be dependent on your personal circumstance and the strength of your application.

 

Over how long can I borrow money?

Anything from 2 to 12, 18 or 24 months. As with the amount, the terms you’re offered will depend on your application and financial situation as it stands today. Bear in mind, the longer you choose to pay over, the more you’ll pay back, so think about whether you can actually afford to clear the debt sooner on a shorter term.

How expensive is a no guarantor loan?

Very. Here’s a typical example:

– You borrow £1,800 over 24 months at 71.3% pa (fixed).

– You make 24 monthly payments of £142.65.

– You repay a total of £3,423.67. That’s almost double, and that rate is fairly standard.

 

What happens if I miss a payment?

Each lender will have a different procedure if you miss a monthly repayment and these will be set out in the terms and conditions you’ll need to sign at the start. Typically, they’ll take both your account details and a debit card number at the start of the loan term. They’ll try to take your direct debit first, if they’re unable to get the money, they’ll try your debit card.

Most will contact you, usually by text message to let you know a payment has been missed and that they’ll be trying the alternative method. If this results in no payment as well, they’ll call you to discuss how your arrears can be made up and may put you on a different payment plan. There are usually charges issued in addition to the extra interest, to cover the costs of dealing with the issue.

As always, if you think you’re going to miss a repayment, contact your lender beforehand to let them know. They can start looking into options, change your payment date and may even waive any fees that you would have accrued. After all, they just want their money back and will help you if it means they stand more of a chance of getting it.

 

Can I repay the loan early or overpay?

 

This is definitely a feature you should look for when researching your options. Try and use a company that lets you repay the loan early without any charges. Most will let you overpay, but some will charge you for repaying the entire loan early – often two months of interest – as they’re losing out on profit.

 

This is my first loan, can I still get one?

This type of loan is often targeted at people with little to no financial history or at those with a significant gap in their history, if they’ve been abroad for example. Being a first-time applicant won’t bother these providers too much as the interest rates are high enough for them to take a risk on you.

That said, expect to just be offered a low loan amount, as lenders will want to dip their toe in the water a little and test you out as a customer before giving you £5,000. It’s especially important for you to do your research, choose a company wisely and check all of their acceptance criteria before applying. If you don’t do this and hop from application to application, your blank financial history will soon be a blacklisted one.

 

Your no guarantor loans checklist

Here’s everything you should do before hitting that ‘apply’ button:

 

  • Look to the end of the month and be sure you can make the repayment. You should still be able to make it even if your circumstances change and your income drops.
  • Try to reduce other debts and improve your financial score.
  • Get to know your financial shadow – your financial file is what lenders see, access it for free and always look to improve it.
  • Always compare rates from different lenders.
  • Use a calculator to find out the full cost of the loan, you’ll find one here .
  • Choose a repayment term before you’re offered one, remember: although a longer term means lower repayments, you’ll end up paying back more.
  • Once you choose a provider, use TrustPilot and other ratings sites to check how customers are rating them. Read the quotes too and only use high-scoring companies.
  • Take the time to read the terms and conditions, even better ask a friend to look at them too. It might seem boring but it’s incredibly important you do this upfront, before signing anything.

 

No guarantor loans – now you know

 

So there you have it, now you’ve got a rounded view of what loans with no guarantor are and what to do before applying for one. It may seem easy to apply for a loan without a guarantor, but take your time, do your research and never rush into a decision. And as ever, if you’re struggling with debt – this type of funding isn’t your answer. Instead speak to your lender and be honest, also check out National Debtline, the Citizens Advice Bureau and the Money Advice Service.