Applying for a loan is one of the primary options most individuals use to meet both their short-term and long-term goals. While there are various types of loans, the no guarantor loan or unsecured loan as popularly known happens to be the most popular one of them all. This could be because they don’t compel you to put-up your assets or those of your loved ones as your loan collateral.
So looking at it from that angle, it’s non-risky and quite convenient. But before you joyfully jump at what these types of loans have to offer, there are a few helpful considerations you should have in mind. This article compiles for you the advantages and disadvantages of taking a no guarantor loan.
1: Simple Eligibility Requirements
Unlike the guarantor loans that have tons of eligibility requirements, the unsecured loans make it very simple for interested parties. For instance, according to moneytrumpet.co.uk/no-guarantor-loans/, all you need is to be above 18 years and not over 75 of age to qualify. You must also have a UK bank account. But you don’t have to produce your best credit statement so if you have a bad credit, you at least get some hope here. Also, there is no need for “forceful” bankruptcy statements. In other words, it’s as simple as ABC.
2: No Paperwork Nightmare
In the past individuals seeking loans, be it guarantor or non-guarantor loans had to fill out a lot of forms as part of the application procedure. But now with the rapid technological advancements in the financial sector, that’s part of the past. All you need is to fill out the online forms and you get yourself on the waiting list. No more attaching scanned copies, which has made the process so smooth, fast and hassle-free.
3: You Don’t Need Guarantors
With these types of loans, you don’t have to place your financial needs at the mercy of other people. While it might be easy to talk to people about an attractive business idea, it isn’t the same with asking them to stand-in as guarantors for your loan. Many individuals, including your close friends, will literally run away at the mention of such a name. You also don’t have to place a pledge on your hard-earned assets.
4: Fast Approval Process
Are you in a sort of emergency, are unemployed or with a bad credit? This type of loan can be your lifesaver. The approval process doesn’t take up so much time as there isn’t much to verify. The providers normally go through the soft credit check and alas, your loan gets approved within no time.
5: Customized Repayment Modes
There isn’t a one-fits-all repayment method when it comes to unsecured loans. Most lenders will give you conditions depending on your situation. The simple installment works perfectly, making it ideal for unemployed individuals or business people in a tight financial fix.
Like everything else, this type of loans have their share of disadvantages;
1: Limitations on Loan Amounts
Let’s face the truth here, no provider can be willing to release large chunks of money to a borrower they aren’t sure they will be able to repay. So most of the time, lenders give out what they can’t risk losing. So you shouldn’t have high expectations when it comes to unsecured loans. They aren’t many to solve your high-end financial issues, but rather give you a substantial boost.
2: High-Interest Rates
This shouldn’t come as a surprise. Due to the high-risk nature of non-guarantor loans, it’s only logical for the lenders to apply high-interest rates as a way of encouraging timely repayments. They offer these loans based on trusts and probably instincts. And this majorly affects the bad credit borrowers as they have to gain trust.
3: Doesn’t Offer Much Flexibility
The conditions of getting a non-guarantor loan normally revolve around giving a certain repayment period. This is in installments of course. Therefore, if for example, you agree to be paying £100 per month over the next 4 years, there is no way you can change that in the future, no matter how bad your financial issues get. The same case applies to early repayments. There is no way you can decide to repay the loan at a-go when you get money. Both of this will attract a fine.
A no guarantor loan seems like the best option for individuals with bad credit records and the unemployed. However, you should take time to clearly understand the terms and conditions before settling for one. They have pros and cons and are ideal for individuals seeking small loans. But if providing collateral doesn’t worry you, then you might want to consider taking a secured loan.