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Representative Example: Borrow £700 and pay £111.27 per month for 12 months at an interest rate of 140% per annum (fixed).
The total charge for credit is £635.24 The total amount repayable is £1335.24. Representative 277.5% APR (variable). Your APR rate will be based on your circumstances.
† Subject to lender's requirements and approval. Not all loan amounts are eligible for 20 minute payouts. Your bank may increase the time you receive the money considerably.

Guarantor Loans For Bad Credit – UK Direct Lenders

Key points

  • These are often an option for those with a poor credit rating or very little credit history that may have been refused elsewhere.
  • If payments are missed, your guarantor is liable to meet the repayments.
  • Typically these have a higher acceptance rate than other lending methods as the risk to the lender is lower.

Looking for a reliable form of financing in the UK? There are certainly plenty of options that you can consider from personal loans, payday loans, and even secured loans like logbook loans. Payday loans for one, are quite popular in the country because of their speed and accessibility that makes them ideal for dealing with emergency cash shortages. If you are looking to secure large borrowing amounts with flexible payment terms and competitive interest rates even if you have an inadequate credit score, however, then guarantor loans are financial products that you can look into.

How guarantor loans work

The loans are normally available in a range of borrowing amounts from £1,000 to as much £15,000 and repayment periods from one year to more than five in some cases. While the loans are essentially unsecured types of loans, they differ from standard unsecured loans in a way that there are three parties involved in the agreement – the lender, the borrower and a guarantor. By entering the loan deal as a co-signer, the guarantor is legally obliged to shoulder the repayments or settle the money that is owed to the lender if the primary borrower is unable to keep up with them.

To obtain guarantor loans, you need to find a suitable guarantor first and foremost. Every lender in the UK has its unique eligibility criteria for a guarantor. Keep in mind these key points when looking for a potential guarantor:

  1. Your guarantor can be anyone as long as the person doesn’t share any direct financial relationship with you which means spouses or partners are not allowed.
  2. Majority of lenders in the UK will consider a guarantor who is at least 21 years of age, have a good credit history and, in some instances, be a homeowner.
  3. As the lending industry has become more competitive and the borrowers increasingly growing in the number, many lenders are now willing to accept guarantors who are not homeowners as long as they have a solid credit rating.

It’s important to note that although lenders will not put a premium on your credit history, they will still look at your present income and outgoings to determine if you can keep up with the repayments in approving your loan application.

There are also significantly smaller guarantor loans available in the UK that you can access for anything between £50 and £750 over a short time frame. Compared to other popular short-term loans in the country like payday loans, these can be repaid through installments. The interest rates for the type of guarantor loan is levied on a day to day basis which means paying off all the repayments in advance will allow you to enjoy lower costs overall.

Why taking out guarantor loans make perfect sense

If you are unfamiliar with the UK’s loan industry and don’t have enough credit history or if past financial troubles have left you with a blemished credit rating, it can be challenging to secure the kind of funding needed for the purchase of major expenses like a new car. If you are currently in this position, then taking out a guarantor loan is something that you can consider because:

  • The loan helps you obtain larger borrowing amounts than other forms of credit that are typically offered to people with bad credit.
  • The interest rates for the financial products are normally lower than other types of unsecured lending for people with low credit scores. With a guarantor loan, you can borrow money at an average APR of 45% – 50%.
  • If you are looking to secure funding right away and have been rejected by banks and other traditional lending institutions due to your inadequate credit standing, a guarantor loan could be the quick solution you need.
  • Given that you satisfy the lender’s eligibility requirements, the loans can be paid directly to your bank account within 24 hours after application approval.

Things to consider

It’s important to note that if you fall behind with your repayments, your guarantor will be legally obliged to make the missed repayment or pay off the loan entirely depending on the agreed terms and conditions. Additionally, the guarantor could also be responsible for any penalties and charges levied on the loan especially in the event of late payments and defaults. With that being said, it’s vital that both you and your guarantor are completely knowledgeable about the possible consequences if any of the loan terms and conditions are violated before applying for a guarantor loan.

You should also consider the potential risk that the loan could bring to the kind of relationship that you share with your guarantor. And while the interest rates are lower than payday loans, instalment loans, and other forms of bad credit loans, they can still be higher than traditional types of credit. Lastly, bear in mind that in some instances, the APR’s on your loan can be variable and not fixed.

Get the funding that you need with guarantor loans

With all of the above things considered, guarantor loans are still one of the better loans in the UK that you can consider especially if you are looking for a quick and reliable means of funding that caters your present credit rating. The unique financial products can help you enjoy potentially large amounts of funding with competitive interest rates and flexible payment terms that are almost impossible to obtain with other financial products if you have an inadequate credit history. If you have been snubbed by banks and high street lenders, then having a guarantor to back up your loan deal could help you secure the funding that you need. Majority of guarantor loans in the UK will even allow you to repay your credit early without incurring any extra charges.

Online Guarantor Loans can offset your Bad Credit

With the majority of banks and financing institutions in the UK shutting their doors to numerous loan applicants due to their imperfect credit scores, it’s a sigh of relief knowing that there is another unsecured loan option to consider – guarantor loans. While bad credit is usually an automatic rejection of mainstream financing, there are still lenders and options online that you can consider catering your need for funding as long as you can offer a suitable guarantor.

How a Loan with a Guarantor Could Help

Numerous lenders will consider a bad credit history as risky an investment – even if such credit issue was something beyond your control. However, if you manage to convince a close friend or family member to co-sign your loan as a guarantor, then this will convince lenders that the money they will lend you will be paid back in full. For this reason, your application won’t be approved on the basis of your credit rating alone.

Basically, the guarantor will be someone who will step in if you, as the borrower, will encounter any difficulties in making the agreed monthly payments. In the eyes of the lender, this kind of agreement offsets the risk involved in your bad credit rating. And as long you manage to keep up with your repayments, you can enjoy the funding that you need for far lower rates without risking the friendship and relationship you share with your guarantor. Your credit rating will also improve as a result, which means you will be able to borrow even larger amounts for cheaper rates in the future.

Guarantor loans could be the perfect solution to your financing needs and bad credit problems because:

  • No matter what your current credit rating is, it won’t be a problem in securing a guarantor loan
  • There is little to no reliance on credit scoring
  • CCJs, Defaults & Arrears can be accepted
  • Help you improve your credit score by repaying your loan
  • Rates are significantly lower because you provide a guarantor
  • You can take out large amounts of borrowing for as much as £15,000

Throughout the years in the UK, the amount of guarantor loans that borrowers can take out has become even bigger as more and more lenders are entering the already competitive market. The largest loan you can apply for will normally depend on whether your guarantor is a homeowner or a non-homeowner:

  1. A guarantor is a homeowner – apply for up to £15,000
  2. A guarantor is a non-homeowner – apply for up to £7,500

Guarantor loans vs. no guarantor loans

If you search online, you will typically find bad credit loans that are unsecured with APR’s that hover around 70%. While such loan’s do not require a guarantor, the APR is significantly higher. By offering a guarantor, you can enjoy a competitively low APR bad credit loan. The representative APR for most guarantor loans is in the region of 40% which is 30 points lower than a no guarantor option. There are even lenders that can offer rates for as low as 30% depending on key aspects including:

  • The loan amount
  • Your guarantor, in particular, whether they are a homeowner or a non-homeowner
  • Your guarantor’s credit score (some lenders use this risk assessment system)

Personal Loans for Bad Credit

Loans without a guarantor can either come in secured (a collateral is needed) or unsecured (no collateral needed) forms of credit. Guarantor loans are just like personal loans from banks, credit unions and other financing institutions. The only difference is that a standard personal loan requires the borrower to have a stellar credit rating but a guarantor loan doesn’t. You can consider it as a kind of personal loan for bad credit.

Small Short Term Loans with Bad Credit

There are also guarantor loans that are offered in smaller amounts anywhere from £3,000 to £4,000 and even smaller, short-term options for as little as £100. The process of taking out these small loans are the same as with larger loans, but the APR is higher due to the nature of the loan and the faster repayment required. However, it still fairs well compared to other short-term loan options that have no guarantors like instalment loans and payday loans. Normally, you will have to pay back the loan in fixed monthly payments after 6 months or 24 months.

Guarantor loans in the UK and Guarantor loans with instant funding

If you are looking for instant guarantor loans in the UK, you can find plenty of lenders online who can give you just that. These lenders have designed an extremely fast application process for their loans so you don’t have to wait. This makes the loans not only ideal for obtaining funding if you have bad credit. but also in dealing with emergency expenses.

How to get your Instant Guarantor Loan today

Expect an application process that is quick, seamless, and efficient. The entire application, from the initial enquiry towards the signing of the lender’s documents, can be accomplished purely online. You also won’t be required to forward any kind of documentation or complete any form of paperwork whatsoever because the lenders are already using an automated system of doing the needed checks online, and instantly as you sit comfortably with your mobile device or laptop. And if you can provide the essential information at hand and your guarantor meets the eligibility requirements, you could obtain your guarantor loan today.

The fast and easy online process works like this:

  1. Make an initial enquiry on a lender’s website that will require you to complete a form that only takes a few minutes of your time.
  2. After you have made an initial enquiry, the lender will give you an initial offer that shows the amount, its interest rates, and payment terms that you are qualified for.
  3. Complete the details on your lender’s website so the lender can verify the information that you sent.
  4. Make sure that your guarantor co-signs the agreement online
  5. After your application is approved, you could enjoy instant payout today

How do lenders provide instant payouts?

Most lenders can give you the loan amount that you requested for on the same day as your application. But that’s just the average as there are also those who can do it in just a few hours. This can be accomplished if:

  • Your personal circumstances are not complex regardless if you have any credit problems or not
  • Your first guarantor meets all the lender’s eligibility requirements
  • You and your guarantor are readily available to ensure that the process moves forward constantly (e.g. you instantly cater any questions that the lender asks you or make prompt confirmation phone calls with the lender)
  • The application was processed early enough for the bank transfer to be completed before the end of the banking day

This means that if you apply today, the lender could provide you with instant payouts on the same day provided that you meet the requirements mentioned above.

Why opt for guarantor loans from a direct lender

A legit direct lender in the UK can transfer the funds that you have requested for directly into your account without any fuss or delay. Basically, a direct guarantor loan lender is a financing company that has the means, reach, and resources to provide loans to their customers without the need to rely on a ‘middle man’ or third party. This means that you will only be applying for a guarantor loan with one lender and interact and correspond with such lender throughout the entire process – from the application approval towards the transfer of funds and finally on the repayments – making the credit agreement simple and efficient.

There are guarantor loan providers that will require their customers to use a third party service called a lead provider, affiliate or broker to access their services. With a direct lender, potential borrowers can come directly, resulting in unfiltered access to the lender’s helpful and friendly staff. This allows for a better level of trust between you and the lender, that can pave the way to a mutually beneficial working relationship.

How to find the best direct guarantor loan lender

The best lender for you is often the one that can satisfy your personal needs. The lender you choose should understand that people and their situations are unique and having bad credit doesn’t necessarily translate to an inability to make proper repayments. All in all, choose a lender that:

  1. Focuses on the borrower’s present circumstances rather than his/her past credit history.Would cater borrowers even if they have been turned down by banks and other mainstream lenders because of inadequate qualifications.
  2. Provides competitively low rates. The interest rate they offer might not be the lowest in the market, but it is the lowest one that you can get.
  3. Offers flexible payment terms that are tailored to your needs and present circumstances. Should not charge any penalty or fee if you decide to repay your loan early to save on interest rate payments.
  4. Offers fast turnaround times. The lender should at least be able to provide you with the funding that you request on the same day or the next business if you are in an emergency situation.
  5. Is an authorised lender by the Financial Conduct Authority (FCA).

Guarantor Loan FAQ’s

What are guarantor loans?

It is a loan you can get, but only if you have somebody who agrees to be your guarantor and sign the agreement alongside you. This is a person who will “vouch” for you and basically agree to make the repayments if yours bounce or you are unable to make them for another reason. This person will obviously need to be somebody you trust and who also trusts you because it is a very big responsibility. Your guarantor will need to fit certain criteria in order to be your co-signer for the loan.

Who can be a guarantor?

To be a guarantor, the person has to be living in the UK, have a good credit rating, be in employment and sometimes a homeowner. There are some loan companies out there who are not as strict on the homeowner part but again, this will vary depending on what provider you go with. Family members can be your guarantor but spouses/partners can not because they share a financial record with you.

Who is this type of loan right for?

A loan like this might be right for you if you have been rejected for credit in the past, you have missed repayments or you just don’t have that much of a great history with credit. These type of loans give everyone the chance to get credit, even if they have made bad financial decisions previously and want to go for a clean slate. Providing you make the repayments on the agreed date, this type of loan will also help you build back up your credit rating.

What is the interest like on these loans?

The interest you pay varies from loan to loan and this is no different with this one. It depends on the timespan of the loan, the amount and many other factors. Guarantor loans are known to have a better interest than others but nothing is guaranteed so make sure you know what you are signing up for.

How to apply for a guarantor loan?

You can apply for this type of loan online, which means no paperwork and not too much of your time will be taken up. You will be asked some basic questions to confirm your identity, the amount you need and the details of the guarantor will also need to be put in, as they are co-signing the agreement. A decision will then be made and if approved, the funds will be in your back ASAP, often the very same day.

Will the guarantor ever be contacted?

Providing you make your repayments as agreed, they will not be contacted in any way except to confirm they are agreeing to the initial loan and all the information is correct. It will still be your loan, your guarantor will simply be a sponsor of sorts if anything does happen and you do not stick to your agreement with the loan provider.

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