Nowadays, the loan marketplace in the UK has plenty of lending options available for the borrowers, particularly those having a bad credit score. It is obvious that lenders do have tough competition with each other and due to this, they have to plan out some attractive jargons to attract a large number of borrowers. In this process, one term we used to listen these days and it is ‘guaranteed loans’. It looks very attractive to read because nothing can be better than getting the loan approval on the guaranteed basis. But remember, does the concerned financial authority allow this to the lender? May be ‘Not’, so thus how can a lender advertise its products with using guaranteed term? Let us take our discussion further.
‘Guaranteed’ word is not all about ‘guaranteed approval’
Yes this is true but it may look strange to you. There are many people, who think that the lender gives them the surety of loan approval without any major obligation but in the end, it would prove just a myth for them. Or, probably they have not researched well before applying for the loans. It is indeed a big mistake and you should not do the same. Instead, take financial expert’s advice or research hard on the internet to understand this attractive term prescribed by the lenders. However, we are also trying to make you understand through this blog. Continue to read below.
The term ‘guaranteed’ reflects TWO TYPES OF BORROWING:
One, where guarantor is required;
Another, where guaranteed approval is there due to small amount
Presence of ‘Guarantor’ Means Guaranteed Approval
If you go through the definition of ‘guaranteed loans’ on investopedia, it clearly reflects that loan can only be guaranteed if it is backed up by third party assurance i.e. the guarantor. It is the person, who co-owns the responsibility of making repayments on behalf of the main borrower, who is not in the condition to give back the loan amount. However, the person should have the good credit scores and he or she must be the homeowner.
If you have a person with such qualities and to act as your guarantor, then you will be eligible to avail these loan benefits:
- You can borrow a large amount because lender is relaxed with getting repayments either from you or your guarantor.
- The interest rates will be low and again the reason is same i.e. you have a person taking your guarantee.
- If you have a bad credit score, you can still apply for the loans but as mentioned above, your guarantor should have a decent credit history.
People with no job in hand can also seek such financial assistance, but they need someone with good financial status to back them in repayments.
Asking for ‘Small Amount’ Means Guaranteed Approval
The term ‘guaranteed’ is also meant for the guaranteed approval, if the borrower has asked for the small amount. Just like payday loans, the amount should be between £500 and £3000 so that lender would not feel any risk in accepting the loan application of the borrowers. It would be interesting to know that majority of the loan applications come in this category and the product, which is searched most, is the guaranteed loans for bad credit with no guarantor needed.
Here are some benefits of this alternative:
- You can get the instant approval because the amount is small and there are not so many obligations involved in it.
- Same day approval becomes a possibility here, as the entire application procedure will be practiced through online medium.
- Since the amount is not large enough, people with poor credit rating are also eligible here and they can also improve their credit rating further.
- Pledging the collateral is also not mandatory and people with unemployment can also get guaranteed approval by ensuring repayment through their extra income sources like rent or freelancing.
Hope you will understand the real meaning behind the term of ‘guaranteed loans’. It is extremely important to have a clear knowledge of all the loan terms and of the marketplace because any correct decision will help you in having a balanced life whereas a wrong decision will make it more difficult for you.