Yes, it is possible to find a short term loan without a guarantor. At Money-Wise, we help you with precisely that. Let us start with what a non-guarantor loan is.
What Is A Non-guarantor Loan?
A non-guarantor loan is one in which there is no involvement of a third party between the lender and the borrower. Only the lender and the borrower are parties to the loan agreement. No other party is required on the borrower’s behalf to reassure the lender.
It would be best if you had a strong credit score to take out a loan without a guarantor. You might need collateral if your credit is less than ideal. Similar to your property paper, collateral is. If you don’t repay your loan on schedule, it aids lenders in recovering money.
Money-Wise Instant Personal provides a loan application alternative. A guarantor is not required. Applying for a short-term loan is possible. Money-Wise doesn’t require a guarantor.
Difference Between Loans With Guarantors And Those Without It
A third party must accept a guarantor loan, which is how they differ from non-guarantor loans. You receive a loan for a non-guarantor loan without a guarantor.
A loan guarantor is just as responsible for loan repayment as a borrower. A guarantor has a high CIBIL score and a solid loan repayment track record. Most of the time, your family and close friends are guarantors. The guarantor must be reliable to the lender and have a good credit rating.
When someone wants a loan for any purpose related to their finances but cannot obtain one because of their poor credit history or credit score, they have no credit score if they have never taken out a loan. Otherwise, a person would have a low credit score if they obtained a loan or credit card and failed to make timely EMI and credit card bill payments. Then neither conventional banks nor NBFCs offer loans without a guarantor. Bad credit makes it challenging to obtain an unsecured loan without a guarantor. You must have faith in the guarantor, who co-signs the loan agreement with you, to accept a loan, and the guarantor must have faith in you. Your guarantor will be required to pay back the loan balance if you cannot make your payments on time or if you default on the loan.
You always approach a close friend or relative for a guarantor loan. Most of the time, family members and close friends with good credit are guarantors. However, in this instance, there is a chance that the relationship could be jeopardized. Sometimes your relationship will sour because of late payments and defaulting on the loan due to financial circumstances.
You didn’t need a third party, relative, or close friend to guarantee a non-guarantor loan. Non-guarantor loans are given based on your capacity to repay the debt. Without a guarantor, the lender is betting on your ability to repay the loan because they have faith in you.
What Options Are Available To Someone With A Low Credit Score?
- A Secured Loan
Anyone with a low credit score should consider pledging collateral, such as gold loans, loans secured by property, or secured credit cards. The term “secured credit” refers to loans and credit cards with low risk to the bank account.
While getting a home or car loan may be challenging, getting the other loans is very doable. Because the risk to the bank is lower, banks will be more forgiving with the interest rate in this situation. Your loan will be between 60% and 70% of the value of the collateral.
Similarly, secured credit cards operate on the same principles as secured loans. 60% to 70% of the pledged collateral will be your loan limit. You might believe that the advantages of the cards will differ depending on whether they are secured or unsecured, but this is untrue. You will pay less interest than with an unsecured credit unions card. Typically, fixed deposits are used as collateral for secured credit cards.
- Unsecured credit
You need to be employed by a reputable company with a high income if you want to apply for unsecured loans, which do not require any upfront collateral.
The biggest problem you will experience is paying high-interest rates. Because there are risks involved in providing you with an unsecured loan, banks will charge you a higher interest rate. Banks may occasionally lower the loan amount. For instance, under normal circumstances, your eligibility for a home loan could be between 80% and 90%, but if you have bad credit, you are likely to receive only 65% to 70%.
As banks try to get the loan paid off as soon as possible, your loan term will also be shorter.
In addition to banks, a person with bad credit has three other options.
1. NBFC – A few NBFCs offer loans to borrowers with poor credit. A slightly higher interest rate will be applied.
2. Peer-to-peer (P2P) – Some websites offer P2P loans for terms ranging from 12 to 36 months, with a maximum loan amount of 5 lakhs.
3. App-based lending – With the rapid development of digital technology, many startups have appeared that offer short-term loans based on your salary, which is an excellent way to raise your credit score. Even though the interest rates on these loans are typically higher than average, they are still worthwhile if you have no other options and a minimum credit score requirement.
Concluding About Non-Guarantor Short Term Loans
Money-Wise is your only stop to approaching a short-term personal loan. We have a massive setup for these kinds of typical payday loans and personal loans. The process is easy and time-saving, making it a win-win situation for you even if you have bad credit. So what are you waiting for? Contact us today and get your issues resolved.