Loans without a guarantor

If you have a bad credit history, it can be a struggle to get approved for a loan unless you have a guarantor – someone who’s willing to pay back the loan if you can’t. But is it possible to find a loan without a guarantor, if your credit rating is poor?

If you have a bad credit history, it can be a struggle to get approved for a loan unless you have a guarantor – someone who’s willing to pay back the loan if you can’t. But is it possible to find a loan without a guarantor, if your credit rating is poor?

Rob Silvey
Finances expert
5
minute read
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Posted 2 FEBRUARY 2022

Loans without a guarantor 

Most loans are non-guarantor loans – that is, a loan directly between you and the lender. The problem is, if you have bad credit, it can be a struggle to find one. 

Many bad credit borrowers look to a guarantor loan. This mean that a guarantor – usually a close relative like one of your parents – guarantees to pay back the loan if you can’t meet the repayments yourself. 

But what if you can’t find a guarantor or don’t want to burden someone else with that kind of responsibility?

What is a loan without a guarantor? 

You might have seen advertised ‘loans without a guarantor’. These types of loan are generally aimed at people with bad credit

And while they don’t require a guarantor or an asset like your car or home as collateral, they can be very expensive. 

You should think very carefully about taking out a loan, especially if you have existing debts and a poor credit history. If you struggle to meet the repayments, your financial situation could easily spiral out of control.

Can I get a loan without a guarantor? 

As with all loans, it will depend on your lender’s criteria – this can vary among lenders, but at the very least you’ll need to:

  • be 18 years old or over
  • be a UK resident
  • have a UK bank account with a valid debit card
  • have a regular income
  • show you can afford the loan repayments

What are the advantages of a loan without a guarantor? 

  • You don’t need to find someone willing to act as your guarantor.
  • You’re not lumbering someone else with the burden of repaying your debt if you can’t make the repayments yourself.
  • It’s usually much faster to set up than a guarantor loan.
  • In most cases, money could be in your bank account within hours.
  • It could be handy for short-term emergencies, like a broken boiler or unexpected car repairs.
  • If you’re able to make your repayments on time each month, it could help improve your credit score.

What are the disadvantages of a loan without a guarantor? 

  • It can be a very expensive way to borrow money – most non-guarantor loans have much higher interest rates than a typical personal loan.
  • Options can be limited, especially if your credit rating is poor.
  • If you’re unable to meet your monthly repayments, you could end up in serious debt.

Are payday loans the same as a loan without a guarantor? 

A payday loan is a very short-term loan designed to tide you over until payday. You don’t need an asset or a guarantor, so it could be considered a type of ‘loan without a guarantor’. 

With a payday loan, you’ll usually have a month to pay back what you owe, plus interest. Payday loans can be incredibly expensive, as interest rates are typically much higher. It’s far too easy to fall into a cycle of debt with this kind of loan, so they’re best avoided.

Are loans without a guarantor more expensive? 

As loans without a guarantor are typically marketed for people with bad credit, they can be more expensive. This is because: 

  • bad credit borrowers are considered a higher risk.
  • lenders don’t have the security of an asset or guarantor to fall back on. 
Did you know?
If you need to borrow a small amount and are on certain benefits, you might be eligible for a government Budgeting Loan. You don’t need a guarantor and the loan is interest free – you only pay back what you borrow. Find out more about Budgeting Loans at GOV UK

 

How to get a loan without a guarantor 

Good management of your finances means you could avoid expensive ‘non-guarantor loans’ altogether. 

To improve your chances of getting a regular unsecured personal loan you’ll need: 

  • A good credit score – the higher your credit score, the more likely you are to be approved.
  • A low debt-to-income ratio – lenders will look at how much of your income goes towards paying your debts. The lower the ratio, the higher your chance of being approved for a loan.
  • A regular income – a stable job and regular income can help convince lenders you’ll be able to make your monthly loan repayments.  
Top tip
Make sure you’re registered on the electoral roll before you apply for any type of credit. When you register to vote, it will be marked on your credit file. Lenders use this information to confirm your identity and address. If you’re not on the electoral roll, it could lower your credit score.

Compare the Market Limited acts as a credit broker, not a lender. To apply, you must be a UK resident and aged 18 or over. Credit is subject to status and eligibility.

Frequently asked questions

Can I get a loan without a guarantor if I have bad credit?

Although loans without a guarantor are generally aimed at people with bad credit, there’s no guarantee your application will be accepted. You’ll still need to pass a hard credit search, when the lender will check your age, address, resident status and ability to pay back the loan.

Should I get a loan without a guarantor?

Before you apply for a loan, ask yourself: 

  • Is there another way to borrow the money you need? Do you have savings you could use instead? Could you cut down on your spending?
  • How much money do you need to borrow? The golden rule is to only borrow what you need, then pay it back as quickly as you can.
  • Can you really afford a loan? Work out how much money you’ll have left once you’ve paid your usual monthly expenses – will it be enough to cover the loan repayments?
  • Have you read the terms and conditions of the loan? Are there late payment or early repayment charges? 

Our loan eligibility checker lets you check which loans you might be eligible for without affecting your credit score. You’ll also be able to read the terms and conditions of each loan to help you decide which one might be right for you.

How much will a no guarantor loan cost?

The interest rate you’ll be given depends on your credit score. Typically, the lower your credit rating, the higher your interest rate will be, and the more the loan will cost you.

What are the alternatives to a loan without a guarantor?

If you only need to borrow a small amount of money, there may be cheaper ways: 

  • An arranged overdraft – handy for short-term cash emergencies. Some banks offer interest-free buffers for small amounts, but make sure you don’t go over the agreed overdraft limit.
  • 0% purchase credit card – a way to spread out the cost of bigger items without paying interest. You’ll need to pay off the full balance before the 0% period ends to avoid being hit with high interest charges.
  • Credit building credit card – the credit limit is a lot lower, but used responsibly, this type of card can help you build up your credit score over time.
  • Peer-to-peer loan – you borrow money from a group of investors rather than the bank. There’s no need for a guarantor and interest rates can be better if you have a decent credit score.

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