Not to mention short-term loans are difficult to manage for a myriad of Britons, especially when credit scores are not stellar. With inflation, the financial condition is getting tighter year after year, which is leading to dependency on financial institutions.
Feeling difficulty in managing the routine expenses, you seek financial support from the online lenders as various banks turn down your application by a reason of poor credit score. To get funds instantly, you apply for no guarantor loans from direct lenders, but you end up with paying high-interest rates due to less-than-perfect credit score.
The reason why people are dependent on these loans
People are reliant on short-term loans because they do not have enough savings to dip into. Living cost is rising but income is dropping. Chances are you will face more difficulty in managing your finances post Brexit.
Without having enough savings to meet unexpected expenses, you switch to direct lenders as they take an instant decision. Same day disbursal allows you to tide over as quickly as possible. Since poor credit history raises a question on your creditworthiness, the lender will disburse funds at a high-interest rate.
Follow these tips to easily deal with no guarantor loans
- Before you take out the loan, mull over whether you need funds or not. Is it extremely urgent or you can put it off? Apply for the loan only when it is ineluctable.
- Make a plan in advance how you will repay your debt. The better way to avoid falling behind payment is set aside the money you need to repay.
- Try to skimp on your needs as long as you have not settled your debt. Avoid spending on unnecessary items and avoid the use of a credit card.
Make extensive research before finalizing the deal with a lender so that you get the loan offer at affordable interest rates.
Several lending companies are out there giving you a wide variety to choose the best loan that fits your budget. More than one-third of the population relies on financial institutions to meet short-term and long-term needs.
Though the lending criteria have been flexible over the years, it does not mean that you can easily manage debts. Each loan offer has its own pros and cons. The data suggest that majority of borrowers take out bad credit loans with no guarantor for two reasons: first, your credit report is not stellar and second, it is difficult to arrange a guarantor with a good credit score within a short span.
Pros of the loan:
Simple eligibility criteria
You can qualify for the loan if you are at least 18-years-old and you have a functional bank account. The lender will not run a hard credit check, which will not pull your credit scores.
An amount is disbursed based on your affordability
The lender will evaluate your income statement to determine your repayment capacity. You will get funds that you can afford to pay off. This will not let you fall in debt.
Personalized loan offers
Repayment terms are flexible depending on when you receive your salary. This is an ideal situation for those who are in a tight corner.
Cons of the loan:
These loans come with a high-interest rate if your credit report shows up a high default risk. However, you can get the loan at a lower interest rate if your credit history is fair.
They do not offer much flexibility
Once you agreed on the installment loan amount and the scheduled date, there is no way to change them in the future, no matter how badly off you are.
When you apply for these loans, make sure that you are able to repay them on the scheduled date.No guarantor loans are difficult to manage because of high-interest rates.