People’s reliance on loans has increased for over the years due to rise in high living cost. In fact, some people live from paycheque to paycheque. There is no denying that you need to have an income source to take out a loan, but what if you have lost your job?
Borrowing money with a bank is not possible if you are out of work, therefore you have left only one option – direct lenders. Since they can sign off on your application, it does not mean that you do not need to have an income source. Even though you have a side gig to repay your loan, you are unlikely to have approved your application. Therefore, you should apply for guaranteed loans.
As long as the size of your loan is small, not more than £1,000, a lender is likely to disburse you money without obligation provided you have a good credit rating. If you want to borrow a large amount of money, you will have to fulfil one of the below conditions. In this case, lenders may welcome bad credit borrowers too.
Arrange a guarantor
With a guarantor, you can avail funds without hassle. However, the guarantor must have a good credit standing. You must remember that you cannot evade paying off the debt. The lender will try all methods to get money back from you in case you commit defaults. When all options are exhausted, the guarantor will be called upon to settle the debt.
Arrange collateral
Most people hesitate to act as a guarantor because if they pay off the debt on your behalf, it affects their credit scores. Nobody would ever like to have their creditworthiness damaged because of your default. Further, finding a guarantor seems to be infuriating when financial emergency is hovering like a cloud over you.
Here comes the role of collateral. It means securing the loan against an asset. The lender may get ready to lend money at a lower interest rate despite blemished credit file as they can release funds by selling your asset if you fail to pay back the debt.
The bottom line
Having a guarantor loan approved is no more a cinch. You can apply for these loans by arranging either a guarantor or collateral. However, you do not need to get into it if you are seeking small amount of loan, but you must have a good credit report.
