If we talk about a classic example, we should be able to go to the bank, submit our paperwork, and receive approval from them almost immediately – without any other detours. However, we live in a world that is not so ideal, where not all of us have a stellar credit score, and not everyone can guarantee a high-income job in the paperwork. In this case, you have no way to guarantee that the bank will have coverage in the event that you default on the loan.
That being said, this can be solved with many lenders by bringing in a guarantor – but likewise, not many people have a person that can vouch for them that way. For example, if you are an immigrant on a visa looking for a loan, you might not know someone that can sign for you. You won’t have a person that can take responsibility in the event that you default on the loan – in which case, you might want to get a loan without a guarantor.
Are No Guarantor Loans the Same as Payday Loans?
This is actually quite tricky to answer because the answer is yes and no. In fact, we would say that payday loans are only a small branch of loans without a guarantor – but not every no-guarantor loan is a payday loan. You can find out more about these loans by following this link. These loans have a bad reputation for a reason, which is why you might want to look into more options.
Other Types of No Guarantor Loans
A payday loan might be a good option if you know for certain that you can handle the quick payment and high-interest rate. However, if you do not want to enter an even bigger circle of debt, you might want to check into other loans as well. Here is what you might want to go for.
Personal Loans
Like their name suggests, a personal loan is the kind of loan that you take out for personal reasons. Unlike mortgages, car loans, or business loans, the lenders do not ask for a reason – they just want to know that you can pay your money on time.
Ideally, you should have good credit or stable income if you want assurance that you will receive your personal loan. However, in the event that you don’t have either of those, you may also find lenders that offer no credit check loans. However, you may want to prove to them that you have the possibility of paying back the loan – despite your not-so-stellar credit rating.
Peer-to-Peer Loans
If you have no luck with personal loans, then you might want to try peer to peer lending. With this type of loan, individuals and private investors (as opposed to the workers of a bank) will lend you money through an online medium.
Simply put, a peer-to-peer service is generally a website where borrowers and lenders are matched, making the process much easier for every party involved. They also generally have better rates – but you should also do quite a bit of research, as they tend to be very competitive.
What to Watch Out for with No Guarantor Loans
To put it plainly, when you are looking for a loan with no guarantors, you need to learn how to avoid loan scams. When you are looking for a loan without a cosigner, you might come across illegitimate offers from people that want to take advantage of your desperation. The following aspects might actually be a sign that the loan you are interested in is actually a scam:
The loan is being offered only via phone call.
You cannot seem to find any physical address for the lender
The lender doesn’t have the registration to operate in your case (you might want to verify with your state’s attorney general office)
You are being asked to send money into a personal account.
Similarly, while a legit no-guarantor loan will not take your credit history into account, they will still show some interest in it. Watch out for those that care more about your personal data than your credit information.
