Borrowing money is a fairly straightforward process for most people: you choose the credit that suits you, apply online or in branch with your bank, complete the application process, credit checks and affordability assessments, and if you’re approved the money is usually available within a few days. But if you don’t have a great credit history, borrowing money can be far more restrictive and a little more difficult to access. There are fewer options available and of the loans you can use, they often require a guarantor or security as a secondary source of repayment. So, what kind of loans are available without a guarantor if you have a bad credit history?
Short Term Loans
Short term loans have been around for years and are more commonly known as payday loans. They are intended to help you bridge the gap between paydays and manage small, temporary cashflow issues. One of the benefits of short term loans is their high acceptance rates for people with a limited or poor credit history. While typically a more expensive form of credit, they can offer a borrowing solution, even if you’ve struggled with credit in the past or have been declined from mainstream lending options. Payday loans can be borrowed for around a month and you can typically borrow up to £1,000, though some lenders may provide larger or smaller loans. They can also be accessed online, so the application is convenient and can be completed any time of the day.
Instalment loans by comparison are like long term loans online because you can borrow an instalment loan for up to 12 months. Instalment loans offer an alternative to payday loans, though they function in a similar way, which allows you to spread the cost of the repayments over several months instead of paying one lump sum on your next payday. Instalment loans tend to be more expensive, however, because you are borrowing for longer.
Why can you get a short term loan without a guarantor?
Finances are inherently personal and it’s a subject we often shy away from discussing – even with our closest friends and family. It follows then that some people might be unwilling to ask for help from relatives when it comes to borrowing money, even if the money is not being lent from the relative themselves. Asking someone to be your guarantor for a loan can be daunting and embarrassing – although there is nothing shameful about needing a financial helping hand from time to time! If you don’t want to ask someone to be your guarantor, or perhaps you don’t have anyone willing to help, your borrowing options are diminished further.
Apart from secured loans, short term loans are pretty much the only formal credit option available. While secured borrowing and guarantor loans have their benefits, it’s good for customers to have choice and to be able to borrow without supplying collateral.
The reason for a guarantor is to act as a secondary source of repayment if you fail to make the payments as agreed in the loan agreement. This type of loan may have become an option to you because you have a bad credit history. As records stay on your credit file for up to six years, you can be in a totally different place financially, and still be suffering the consequences of poor credit management from years ago. Short term loan lenders understand this, and they appreciate that you probably still face the same financial needs as people with a good credit rating.
Where can you find a short term loan?
Instant short term loans are almost solely available online to allow for increased accessibility among adults in the UK and so that you can apply 24/7 to quickly resolve whatever financial matter has caused trouble. It’s also worth using a loan comparison site before settling on a lender – just so you know you’re getting the best deal. A quick internet search should show you several brokers and direct lenders you can choose from.
Online loan applications typically take less than 10 minutes, and you often get the loan decision almost instantly thanks to automated algorithms. Your application would be subject to affordability and creditworthiness assessments, but this is just to make sure the loan is affordable and that the lender is acting responsibly in lending to you. All authorised and regulated creditors in the UK must conduct these assessments, though individual lenders’ criteria will be different, which is why short term providers may be able to offer you a loan where other lenders are unable.
Please be aware that while credit may be available, it is not always the best solution to every financial problem. Sometimes, borrowing can actually make your situation worse. Always check that taking out any type of loan is a responsible decision and make sure your finances can support the repayments before applying. There may also be a few other things to consider before taking out a short term loan, so take five minutes to do a little more research if you’re thinking of using this kind of credit.
