Two of the most common personal loan options for people with bad credit are no guarantor and guarantor loans. Just looking at their names, you'd immediately see the difference but we'll just dig a little bit deeper to compare the two products. That way, you'll have a better idea which of the two is best for your situation.
The main different between the two types of personal loans is with the requirements. Guarantor loans, for instance, require a guarantor with good credit for you to be eligible. No guarantor loans, on one hand, do not need any guarantor hence easier to process and get approved for. Other requirements are the same including being of legal age, a resident of UK and having a valid bank account.
In terms of loan amounts, guarantor loans are more flexible allowing you to borrow from £500 up to £5,000 or sometimes £10,000. This means that guarantor loans are the better option if you have a larger financial need. As for no guarantor loans, offer is up to £2,000 and approval will depend on your financial assessment. To compare both loans with other loans in terms of loan amount, head over to Money Super Market at http://www.moneysupermarket.com/loans/.
When it comes to loan terms, guarantor loans naturally have a longer one from 1 year up to 5 years depending on your preference and what you can afford. With no guarantor loans, since the loan amount smaller, the term is also shorter starting from 6 months up to 12 months.
When it comes to APR or annual percentage rate, guarantor loans come out cheaper at an average of 50% while no guarantor loans fall somewhere at 300%. The difference is attributed to the fact that with guarantor loans, the risks are lower for lenders. In the event that you can't keep up with the repayments, the guarantor shoulders your responsibilities as part of the agreement. With no guarantor loans, there is no such guarantee hence the higher interest rate.