How Can Guaranteed Loans Possible for People with Bad Credit?

Financial problems do surprise you, and they will not indicate to you prior. You feel shocked when you face a sudden medical problem, urgent car repair, a small but major damage to your home interior or anything. Why do you feel shocked? It is because you lack sufficient funding. Yes, savings can be there, but you have been keeping them for future financial plans.

What you need is guaranteed financial help from somewhere. Options are there, like asking for money from your friends or relatives. Still, you are not sure whether they will assist you or not. If not, then what will you do? You do not need to approach anyone to have financial assistance. You should move your research towards the UK marketplace and search for the right deal on guaranteed loans for bad credit from a direct lender.

Yes, by doing this, you can have a much-needed loan amount to tackle your financial issues. Besides, your past credit history does not create hassles either. You may say that traditional lenders like banks are also there. Indeed, they are also available, but approaching direct lenders will be more beneficial for you. For instance, they accept only online applications which you can complete while relaxing at your home.

Time is to go deep into our discussion on how guaranteed loans are possible for those with poor credit histories.

What is meant by a guaranteed loan?

A guaranteed loan is not a particular loan product and is not the form of any other funding source. In fact, it is the guarantee that lenders offer to their loan aspirants that they will get loan approval. However, there is a twist. No loan company can promise anyone the guaranteed approval. Before that, it has to be sure about the individual loan affordability.

If the borrowers can afford the loan interest rates and other related fees, they can have the loan on full acceptance. Otherwise, they will struggle. Therefore, loans where the borrower’s affordability is guaranteed are called guaranteed loans.

The concept of affordability works well for people with bad credit scores. How? They will get a loan amount which is manageable from their monthly income. It means they will repay the loan easily, and the lender is sure about it.

Guaranteed loans are possible with bad credit in many more ways. We will discuss them now.

Ways to make guaranteed loans possible for those with poor credit

Time is to take our discussion on the possible ways through which one can get guaranteed loans for bad credit from a direct lender. Here they are:-

Collateral

The primary method to convince the lender of an assured loan approval is to put an asset as collateral against the loan amount. However, the value of the asset should be equal to the desired loan money. Doing this will bring the following benefits:-

• You win the lender’s trust by keeping the loan security;
• You can get a large amount to borrow if you have a significant financial goal;
• You obtain the loan at cheaper interest rates

However, there is a risk too. If you default in between or miss the repayment, then the lender will straightway take possession of your asset to compensate the lost amount.

Guarantor

Collateral is indeed a good option, but it is not possible in every situation. Instead, you can explore the option of the guarantor to get the guaranteed loan approval despite poor credit. Yes, you can find a person who has been good in credit scores, or it would be perfect for a homeowner. The person will act as your loan guarantor while signing the loan contract.

Now, the guarantor is there, so the lender can allow you to fetch a larger amount at low-interest rates. You can also keep the loan term longer and keep the monthly instalments on the smaller side. However, your guarantor should be sincere and should have the income to pay the pending loan amount if needed.

Income Capacity

There is one more method to utilise in order to get guaranteed loans even if your credit score is low. We are talking about your income capacity. Here, the role of the direct lender seems important, as it can accept either full-time or part-time earnings. It also indicates that you will get an affordable amount, which is matching to your monthly income.

The best example of this is the payday loan. You get the lump sum amount within a few minutes, but only that is manageable from your earnings. Here, your poor credit does not make any difference. You will repay the loan amount on your next salary day.

Conclusion

Guaranteed loans for bad credit from a direct lender are a possibility if you remain within your limits. You should know your financial limitations and then decide whether to seek 100% loan acceptance on the collateral, guarantor or your monthly income.

Besides, your current financial circumstances also matter. If you need a larger amount, keeping the collateral or presentation guarantor’s signature will be handy. Otherwise, win the trust of the lender only through your monthly earnings. Now, only you have to decide.