If your credit score does not show a decent history, fetching a loan is always difficult, especially from the mainstream lenders. The primary thing is that many banks and other financial institutions consider the individual’s credit history.
As you can see, the concept is clear. If you have an excellent or good credit history, every lender will go back to you to approve a loan. On the other hand, if your history shows poor credit, then struggling will be there to find a credible loan deal with competitive interest rates.
At the same time, it does not mean that you cannot be eligible for any loan to avail of any financial issues. You do not feel disappointed. Many providers in the UK loan marketplace are there who can assist you in tough financial conditions. Here, we are talking about the loan products from a direct lender. These funding sources are accessible despite having a poor credit history.
In this blog, we have summarised some of the most applied loan alternatives, which direct lenders usually offer with unique features.
Types of most impactful loan products from a direct lender
Perhaps the most utilized and applied loan product from the direct lending market is the payday loan. It may be the smallest of financial solutions, but it is an effective one, especially during financial emergencies. You get a small lump sum amount to borrow and repay on your next salary day.
While doing this, lenders will not force you to put an asset as the loan collateral and arrange a guarantor. This happens because the loan provider believes that one can pay back a small amount from monthly income only.
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Many lenders advertise their loans as guaranteed loans. They do so to show that they are available with their loan approval on a guaranteed basis. However, these are not specialized products but rather an indication that the aspirants can get full acceptance on loan applications if they can afford the loans.
To get these loans, one has to arrange a guarantor with a better credit history. If the main applicant has a bad credit score, the lender does not mind it since the guarantor is there to repay the pending amount.
Bad credit loan
When it comes to loans from a direct lender, one can easily find specialized funding products targeting a specific group of borrowers. The prime instance of it is a bad credit loan. Yes, these loans particularly focus on financial assistance to those with poor credit histories. In these loans, the lender considers other factors, particularly the monthly income, rather than applicants’ credit histories.
Loans for people with bad credit are considered high-interest rate loans because there will be no guarantor and no collateral needed. You can get approval on your affordability. However, choosing a reliable lender can give you peace of mind as there will be competitive interest rates.
Most financial experts are of the view that unsecured loans should be applied from a direct lender rather than a mainstream lender. The primary reason is the flexibility that you get from it. Unlike conventional lenders, the direct lender can vary the interest rate and lending term according to individual circumstances.
Of course, no collateral is needed, but when you approach an online lender, you can have relief from not providing the guarantor as well. It means you can apply for unsecured loans with no guarantor.
One of the loan products from a direct lender is a tenant loan. This is specifically for those who are living on rent but need additional funds to cover their financial emergencies. These loans will be short-term funding products where no asset is needed to secure the loan amount. However, the lender may ask for the guarantor if the larger sum is in the requirement.
In some situations, the lender may allow non-homeowner loans on no credit check as well. However, it happens when the recent financial handling of the applicants is good.
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No Guarantor Loan
Unlike traditional lenders like banks, direct lenders try to fix small financial issues by preparing small loans, which are free from any restrictions. For instance, they are among the leading providers of no-guarantor loans. These short-term funding sources do not need the services of a guarantor, and the approval comes on the individual’s income basis.
These are perfect options for those with poor credit scores. They always find it difficult to arrange a guarantor with a good credit history.
In the Nutshell
In the end, there is no doubt that options are available when someone seeks loan products from a direct lender. All the loan aspirants can select any of the deals according to the prevailing financial circumstances. Still, you need to agree upon the fact that your credit score will play a huge role irrespective of its good or bad history. Interest rates will vary according to it, and a lot depends upon how your lender will treat your loan application.