Bad credit is the worst pointer of an individual's financial expertise. Although there could be multiple possible reasons why one does not have a good credit score which may include personal reasons or just like majority of cases, his or her financial abilities could have been significantly affected by a professional setback, whether it is with the clients (if one is self-employed) or maybe during the employment (there is a demotion or the person has been fired).
Whatever the reason may be, banks and lenders, while considering your loan application need to have a convincing reason for approval. So, taking into consideration the worst-case scenario, you can still apply for loans for bad credit with no guarantor and no fees in an unemployed situation. However, there are several pre-requisites such as you must be at least 18 years old and should be a resident of the United Kingdom. Other than these, there are a few criteria, which we will discuss in this blog as we enlist the reasons why having a guarantor for unemployed loans could benefit you in different ways.
1. Guaranteed Loan Approval
Since the guarantor needs to have a good credit score, he or she being a co-signer gives the concerned lender enough confidence and assurance that even if you, as the lender own a bad credit score, as soon as a brief verification of the guarantor's information is completed, the loan amount is deposited in the registered account within the shortest time possible. This processing time is the longest when you are dealing with the bank and shortest if a local agent is handling your documents. Although statistically, banks are more secured but as long as a lender is certified, there should not be any problem in dealing with them.
Moreover, based on the ability of the guarantor, you can even get good loan deals including competitive interest rates with flexible options to renegotiate even during the lending period.
2. Guarantor loans have less interest
Being more secured for the lenders, as compared to unsecured unemployed loans, guarantor loans have a considerably lower interest rate. It must also be noted that your own credit score could play a big role which may vary from lender to lender. Good credit guarantor loans would undoubtedly have lower interest than for bad credit loans but even after so many shortcomings in your personal abilities, you can still get a decent deal from selected online lenders in the UK.
3. Improve Your Credit Score
Since the transaction does not involve any cash, so, in case you are unable to repay the loan within the allocated time, your credit score could degrade even further. At the same time, getting a comfortable-to-pay loan that you can repay with proper monthly installments can help you improve your credit score gradually. This may not happen overnight but it is important that you strive for a good score. As soon as you are under the good credit bracket, most of your high-interest-related problems can be sorted out all at once.
4. Sense of Responsibility
The lender is granting you the loan because he is well assured that the money he has lent will be repaid to him. In case you do not pay it, the guarantor who would be your friend or family member would be liable for the reimbursement. He or she would be served several notices and if the loan is not repaid, firstly, not just you but even the co-signer would have to face bad remarks on his credit history. So, guarantor loans can help you realise the important sense of responsibility to not put your close ones under the knife when he or she is going out of the way to help you out when you need it the most.
Getting an unemployed loan with a guarantor gives you a good opportunity to stand on your own feet and strive for success with someone's help but at the same time, it is imperative that you do not let that co-signer hang in the middle because of your deeds. Before signing any deal, always consult an expert and strategise properly as the inability to follow the lending protocol could lead you to further financial or even legal problems.
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