Over the years, No Guarantor Loans have become a popular financing option amongst individuals with poor credit. They give the borrower the option to secure funds without needing a guarantor to co-sign for them. These loans generally involve a higher rate of interest as the risks involved for the lender is greater. The possibility of greater risk has invited considerable misconceptions regarding the reliability and viability of this financing option.
This article aims to bust 5 common myths held among borrowers about no guarantor loans.
Myth #1 I won’t get a Loan without a Decent Credit Score
This is probably one of the most common myths among individual borrowers. Due to the inherent risks involved, borrowers generally tend to focus on their poor credit scores. Quite the contrary, No Guarantor Loans are specifically designed for individuals with bad credit. Easy processing of these loans means that anyone can apply, irrespective of their financial situation. Just be mindful about the interest on the loan which in many cases is on the higher side.
#2 Fear of Hidden Surprises
This is another big myth that many fall preys to. The fear of repayments ballooning out of control thanks to hidden charges can put-off many borrowers from taking this loan. The fact is that all lenders are accountable to the Financial Conduct Authority (FCA). This means that lenders are obligated by law to make known to the borrower exactly how much they will be charged. Any discrepancies in the charges levied by a lender can be reported to the FCA. You can call FCA on 0300 500 8082 from the UK, or +44 207 066 1000 from abroad.
#3 Negative Impact on Credit Score
This myth couldn’t be further from the truth. In fact, No Guarantor Loans are extremely helpful in improving your credit score, especially if your loan term is over an extended period of time and you are able to make timely payments. What’s more, you will find plenty of guidance through online loan brokers to help you with your bad-credit issues and improve your credit health problems.
#4 Limited to Small Loan Amounts
Individuals looking for a larger loan amount generally shun No Guarantor Loans as it doesn’t require submitting a guarantee and therefore involves smaller loan amounts. What they don’t know is that you can avail loans of any amount if you are eligible for it. There are online lenders ready to give up to £10,000 to the right borrower. What is important to remember is that higher loan amounts will invite greater APRs and bigger monthly payments.
#5 Extra Charges for Quick Approvals
Another misconception doing the rounds is that quick approvals invariably lead to extra charges for the borrower. The truth is, with the introduction of FinTech (financial technology); lenders are able to process loans faster and with limited or no paperwork. Therefore, borrowers are generally given loan approvals within a few minutes from the time they apply. The same applies to checking the borrowers’ credit history, which generally takes less than a few minutes.
No Guarantor Loans can be a great source of funds when the need arises. Individuals looking for quick access to money and flexibility or repayment, will be pleasantly surprised by how quickly and easily they can gain access to funds. Just a word of caution, remember to make your repayments on-time to avoid heft interest payments. Also remember to shop around to find the cheapest loan available, as that will have a huge bearing on how much you eventually end up repaying.