Without going deeper into the lending trends, the first impression you get after hearing about no guarantor loans is that they aim at helping only those blessed with a good credit rating. Of course, when your credit report is not up to scratch, a lender would likely ask you to arrange a guarantor to minimise the risk involved in the transaction.
At least, this is what common sense says, but contrary to the logic, the fact is that these loans are sought by actually bad credit borrowers who want to borrow money without a guarantor present.
No guarantor loans in Ireland are small loans aimed at funding unforeseen expenses. If thought from another angle, people with good credit ratings would not need a guarantor as they do not involve a risk of making a default. Hence, a lender would freely lend them money based on their repaying capacity.
People with bad credit could struggle to get the nod and may be asked to arrange a guarantor, a person who trusts you and whom you trust with a good credit rating, but no reasonable person would make the mistake of acting as a guarantor. This is when you start seeking alternatives.
Are no guarantor loans the same as bad credit loans?
You will be right if you think that no guarantor loans sound like any other small loan. They are small unsecured loans, in other words, known as 24 hour loans in Ireland or emergency loans.
“No guarantor” is just a term to make it easier for people with bad credit ratings to understand that they have an alternative to borrow money without them. Therefore, these loans are actually bad credit loans.
However, you cannot conclude that these loans are the same as payday loans, although the latter also aims to fund emergencies. There is some difference between both types of loans.
Payday loans also do not need a guarantor and exclusively target bad credit people, so you may think that they are an alternative to no guarantor loans, but that is not so. To avoid the damaging impact of hard search footprints on your credit score, they do not intend to run a credit check, the most common cause of them being subject to high-interest rates.
No guarantor loans are treated like bad credit loans, and they run a credit check. A lender will not make a lending decision unless perusing your credit report and income statement. Therefore, it is suggested that you be careful of applying to multiple lenders because multiple inquiries in a short period can wreak havoc on your credit report.
What are the pros and cons of no guarantor loans?
These loans have both upsides and downsides. The following table highlights them.
| Pros | Cons |
| You do not need to cause worries to anyone acting as a guarantor in case you make a default. | Although these loans are more affordable than payday, they can still carry higher interest rates due to poor credit ratings. |
| There are no chances of putting a strain on your relationship. | The borrowing amount could be lower than you would get by having a guarantor. |
| They are not as risky as payday loans. Interest rates are lower than the latter. | They are not supposed to build credit ratings as the repayment length is short. |
| The processing is faster. You can get the loan the same day, usually within 24 hours. | Because a loan is to be paid in a lump sum, you can fall into debt if you run out of money. |
What loans are available as loans without a guarantor?
You can apply without arranging a guarantor for several loans. Each type of loan works differently, so you will have to decide which loan serves your needs smartly.
- Personal loans
Personal loans are also advertised as unsecured loans because they do not require collateral. In other words, you do not need to put in any obligation – neither in terms of a valuable asset nor in terms of a guarantor.
You simply have to fill in the application form and submit it online. A lender will check your credit file and then will ask you to provide a bank statement of at least three to six months to speculate your monthly expenditure so as to determine the lending amount.
They will send you an agreement disclosing all details like the length of the loan, size, interest rates, APR, default fees, etc. If you agree to all terms and conditions and send back the signed copy, you will get your money the same day.
- Bad credit loans
As the name suggests, these loans target bad credit people. However, you can apply for these loans even if you have no credit history at all. The application procedure for these loans is the same as any other small loan. You can apply for these loans from the comfort of your house. Like other small loans, the entire processing does not take more than 24 hours.
Your credit history is not impressive, so you will likely get a higher interest rate. It is vital to weigh up your repaying capacity carefully. If you make a default, late payment fees and interest penalties will be accrued. This will keep adding up the debt, and eventually, you will fall into debt.
A lender will have to transfer your file to debt collection agencies that will start chasing you until you settle the dues. They may take you to court if you do not turn to them. To avoid being trapped in an endless cycle of debt, you should peruse your repayment capacity.
To wrap up
At first impression, it may seem that these loans do not intend to fulfil the needs of people with bad credit people, but the fact is that these loans actually target such borrowers and those without a credit history. At the time of taking out no guarantor loans, you should check your affordability because these loans generally carry a slightly higher interest rate.
