- Emma Parker
- October 1, 2019
A proper analysis of the UK lending market has clearly made us understand that there is no scarcity of loan options there. In fact, we can say that it has everything for everyone. The most positive change has come in the recent years that loans are available for the people with any credit history. It is very unlike the previous trends of the loan marketplace here. It was the time when the lenders were so much strict on the credit histories of the borrowers. They did not hesitate to reject the particular loan application where the bad credit scores were mentioned. Indeed, it was the tough situation to be in for an individual with poor credit score. Nowadays, the scenario and trends have completely been changing and bringing positive consequences for the borrowers.
If we look at the examples of that modernisation, then guaranteed loans should be discussed here. These are the loans that have to be backed up by any third party assurance of the loan repayments, either through guarantor (in most of the cases) and collateral. Some lenders also offer an alternative where guarantor and collateral are not mandatory. In this scenario, the borrower has to ask for only small amount that he can repay easily. Of course, it does have several advantages.
What about the people with bad credit history? Are the advantages similar to those with good credit history?
These are some of the questions that come in everyone’s mind. The people with bad credit scores, in particular, are primarily concerned about their chances if they want guaranteed loans as their borrowing options. To get clear points, continue to read below.
Benefits for the people with good or fair credit histories
Maintaining a good or at least fair credit score is indeed a commendable job these days. We are telling this because there are plenty of financial problems into the individual’s life. Dealing with these problems without hurting the credit ratings needs a special appreciation. And that appreciation is the easy guaranteed loan approval.
These people have already impressed the lenders with their better credit performances. They can easily fetch a large amount with putting collateral as the backup. Lenders have no problem at all to fund them. Moreover, they can be entitled for the low interest rates that further bring advantages with not to disturb their monthly budget. The loans for people with good credit score are available both from the direct lenders and the mainstream lenders.
Guaranteed loans for people with bad or very bad credit histories
For the people with bad credit scores or very poor credit histories, guaranteed loans are all about the game of both Gain and Loss. Now first understand how the guaranteed loans give ADVANTAGES to the low credit score people:
- Guaranteed loans almost confirm the approval if the borrowers have asked for small amount or put any collateral against the borrowed sum.
- If they repay the amount on time, then there is always a possibility of improving the credit scores and increasing the future financial opportunities.
- Applying from the direct lenders in UK would be more beneficial, as there will be less chance of getting rejections.
Apart from these advantages, there can be some DISADVANTAGES too of guaranteed loans for very bad credit people. These are:
- Borrowers have to agree upon the high interest rates. It is because their credit scores do not put positive impression on the lender.
- Only the small amount is applicable which means long term financial goals cannot be achieved.
- Providing the guarantor may not be possible especially when you have the adverse credit scores.
Every loan option has some advantages and disadvantages for the people with any credit histories. Guaranteed loans also follow the same. For the people with better credit scores, they bring a lot of advantages. But they are equally beneficial for the individuals with less-than-perfect credit histories. Only two things that matter a lot are your current financial need and the policy of your chosen lender.