Loans without a guarantor

What’s the difference between a secured loan and a non-guarantor loan?

With a secured loan, you borrow money and offer up an asset, usually your home, as security.

It lowers the risk for the lender because they know they have a way of getting their money back if you stopped repaying your loan.

If you fail to keep your repayments on a secured loan your home could be repossessed. 

An unsecured no-guarantor loan will not require you to use something you own as collateral. But you won’t be able to borrow as much as you potentially could with a secured loan, plus interest rates will be a lot higher.

Can I get a non-guarantor loan with bad credit?

There’ll be fewer options to choose from, but there are lenders who offer non-guarantor loans to customers with a low credit score.

As well as looking at your credit score, these lenders will consider affordability. If they see that you have an income and determine that you’d be able to afford the monthly repayments, then you could be offered a loan.

The loan will come with a high interest rate though, so you need to be absolutely sure you can comfortably afford the repayments. Also, it’s always a good idea to have a contingency plan in place in case you’re hit with expensive household bills or made redundant.

If you manage your money well and make your payments on time, you can expect your credit score to improve, which can give you access to better rates on credit in the future.

Is it more expensive to get a loan without a guarantor?

Interest rates can be high on loans that are marketed as non-guarantor loans, which makes them a pricey way to borrow.

It’s worth exploring all other options before committing.

Is a loan without a guarantor right for me?

Before applying for any loan, ask yourself these questions:

Do I really need this loan?

Is there another way to access the money I need? Think about whether a loan is the best option for your circumstances. There might be another way, for example, could you wait until you’ve saved up the money? Could a friend or family member help? Remember that even if you borrow from a loved one, it’s important to draw up a loan agreement, so everyone is aware of what is expected of them.

If you’re not sure what to do, you can get free financial advice from Citizens Advice, National Debtline, MoneyHelper or StepChange debt charity.

How much money do I need to borrow?

If you decide on taking out a loan, you’ll need to figure out how much you need. Our loan calculator can help you see how much you could realistically afford to borrow, as well as what it could cost you per month and overall.

Avoid borrowing more than you actually need or you’ll be paying unnecessary interest.

Lenders will want to know what you plan to use the loan for, like home improvements, funding a wedding or buying a new car.

There might be exclusions for how you can use the money. Some lenders won’t allow you to use a loan for a house deposit, for example. It’s always best to be honest about your intentions.

What’s the interest rate and is it fair?

Annual percentage rates (APRs) on loans can vary enormously. In general, you can expect lower rates on guarantor loans than on non-guarantor loans, because there’s less risk to the lender.

Be sure to compare loans from across the market and avoid those with very high APRs. The higher the rate, the more interest you’ll pay.

Also remember that the actual APR you’ll be offered won’t necessarily be the representative APR. This only needs to be offered to 51% of successful applicants to be used in advertising, the rate you’ll receive will depend on your credit score and a few other factors.

Read reviews on the company or financial institution offering the loan before you commit.

Can I afford the repayments?

First, use our loan calculator to find out what the monthly repayment amount is likely to be for how much you want to borrow. Set this figure aside.

Then, calculate how much of your monthly income is left after you’ve paid your usual expenses and bills. Set aside a little extra money for savings or to use as emergency funds, like for unexpected vehicle or home repairs. Then consider whether what’s left of your income would be enough to make the monthly loan repayments comfortably.

What are the terms and conditions?

Read them to find out important information like the repayment amount, interest rate, what happens if you can’t pay it back and if there are any additional fees - such as repayment penalties or admin fees. These extras can end up making your loan more expensive than it first appears.

Use an eligibility checker before applying for a loan, this is a soft search on your credit report which will help identify the loans you’re more likely to be accepted for without affecting your credit score. You can then look at each loan in more detail, including the terms and conditions, to find the right fit for you.