You have a business idea to get started and in need of a loan of some sort, you might be wondering what options you have. First thing banks or credit services will look for is your credit score. For those who has bd credit score, there is a need to look outside of general lending box, especially where they have previously been rejected. Loan applications can be tricky and frustrating.
Other than banks, you may have heard that there are some loan providers that offer a service for those who have struggling to land on a loan. Some of them requires guarantor, some does not.
So you have bad credit score and do not even have a guarantor, would that still work for acquiring a loan?
Good news, yes there are some loans without guarantors. But loans without guarantors are specific type of loan for only over a short period of time.
Those loans are designed to target for people who either cannot find a guarantor or do not want to have a guarantor. It is a new and great opportunity which was not available in past decades. But times have changed.
How does it work?
Being a guarantor is kind of difficult than lender. It is stressful if the borrower fails to pay his debt on time, or even any time. In that case, the guarantor would become legal liable to make payments.
This system takes out the guarantor out of equation. It allows those with bad credit to get a loan where previously unable to do that.
Who is supplying no guarantor loans?
No guarantor loans were rare and usually featured with high interest rate lending terms. Thankfully, this has changed. There are many direct lenders now that have realized that this unfairly prevented some people from getting loans when they needed them.
With an increasing number of lenders offering unsecured loans specifically designed for those in need with no guarantor, the market has become quite competitive, giving you more choice and better payment terms.
Each lender has their own set of criteria you must meet to be offered a loan. Some of these lenders insist on a guarantor, but many do not. There are people specifically looks for providing loans to people with a poor credit rating. You can apply to see if you have been accepted with no obligation and no trace on your credit report. You use panels of credit services on who offers what.
Before you look for a loan, you should ask yourself:
- Do I really need a loan?
- How much do I need to borrow?
- How much can I afford to repay each month?
- What are the terms of the loan?
If you need a hand in answering these questions, try out loan calculators and budget planners. And in case you need extra cash while you pay your loan, check out best side business ideas.