Loans without a guarantor

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What is a loan without a guarantor?

A no-guarantor loan is one that doesn’t need a guarantor (usually a family member or friend with a better credit rating) to guarantee to pay back the loan if you can’t meet the repayments.

Most loans are non-guarantor loans: that is, a loan directly between you and the lender. But loans that are actually advertised as non-guarantor loans are usually aimed at people with bad credit.

If you have a poor credit rating or no credit score at all, some lenders will insist you have a guarantor before they’ll lend to you. If you can’t find a guarantor or don’t want to burden someone with the responsibility, a loan without a guarantor could be an option.

The downside is you can expect interest rates to be a lot higher with this type of loan than on a standard loan.

How do loans without a guarantor work?

If you’re considering taking out a no-guarantor loan, here’s how they work:

Check your eligibility: use an eligibility checker, such as the one we offer at Compare the Market, to find out which no-guarantor loans you could be eligible for without harming your credit score.
If the eligibility checker shows you're likely to be approved, you could consider applying for a loan: the lender will run a hard credit check, looking at factors such as your income, outgoings and credit score, to judge whether you can afford to repay what you want to borrow without needing a guarantor.
Receive the money: if your loan application is approved, the money will typically be in your bank account within a few days.
Repay the loan: you’ll make monthly repayments, including interest, for the agreed length of the loan.

What are the advantages of a loan without a guarantor?

You don’t need to find someone to act as your guarantor. And that means you’re not lumbering a friend or family member with the burden of repaying your debt if you can’t meet the repayments.
You might be able to access funds quicker than through a guarantor loan as only you need to apply. This can be helpful if you need the cash for an immediate emergency, such as a broken boiler or unexpected car repairs.
If you’re able to make your loan repayments in full and on time each month, it could help to 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 no-guarantor loans have much higher interest rates than a typical personal loan.
The range of loans available to you can be limited, especially if your credit rating is poor.
You might not be able to borrow as much as you could with a guarantor loan.
You’re solely responsible for the loan. 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 short-term loan, originally designed to tide you over until payday. You don’t need an asset or a guarantor to get a payday loan, so it could be considered a type of loan without a guarantor.

Although fees for late payment of payday loans without a guarantor are capped by the Financial Conduct Authority (FCA), interest rates are often extremely high.

If you can’t make the repayments, you can quickly fall into a cycle of debt as the interest adds up. Always explore other borrowing options before resorting to a payday loan and avoid them if you can.

You can’t compare payday loans with Compare the Market.

Are loans without a guarantor more expensive?

Loans without a guarantor typically have high interest rates, which makes them more expensive. This is because:

Borrowers with bad (or no) credit ratings are considered a higher risk by lenders
Lenders don’t have the security of an asset or guarantor to fall back on if the loan payments aren’t made.

Did you know?

If you need to borrow a small amount and have been on certain benefits for six months, 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 can I improve my chances of getting a no-guarantor loan?

To improve your chances of securing a loan without a guarantor, you usually need:

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 reassures lenders that you’ll be able to make your monthly loan repayments.

Top tip

Make sure you’re registered on the electoral roll (which is how you register to vote) before you apply for any type of credit. Lenders use this information to confirm your identity and address when you apply for a loan. If you’re not on the electoral roll, it could lower your credit score

Should I get a loan without a guarantor?

Before you apply for a no-guarantor loan, ask yourself:

Is there another way to get the money you need? Do you have savings you could use instead, or might a credit card be an option?
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 whether you can definitely cover the repayments after paying for all your usual monthly expenses (our loan calculator can help you see how much your repayments might be).
Have you read the terms and conditions of the loan? Are there late payment or early repayment charges?

You can use our loan eligibility checker to find out 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 whether any might be right for you.

Check eligibility

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?

Yes, it’s possible to get loans for bad credit without a guarantor, but your choice might be limited. And you might find that loans for poor credit come with a lower borrowing limit or maximum length.

How much will a no-guarantor loan cost?

The interest rate you’ll get on a no-guarantor loan 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 overall.

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 alternatives to loans without a guarantor:

Arranged overdraft – some banks offer interest-free buffers that allow you to go overdrawn by a small amount without paying interest.
0% purchase credit card – lets you spread out the cost of expensive purchases without paying interest. You’ll need to pay off the balance in full before the 0% period ends to avoid being hit with high interest charges.
Peer-to-peer loan – you borrow money from an individual or a group of people, rather than a bank. Peer-to-peer loans are typically unsecured and you won’t need a guarantor. You can’t compare peer-to-peer loans with Compare the Market.