If you’ve been looking at different types of finance to obtain for you and your family, you’ve probably had a look at personal loans. Personal loans are becoming increasingly popular in the United States, but they’ve been around since the beginning of modern finance. Credit cards have been some of the most popular forms of borrowing in the past few decades, but lower interest rates have attracted those who want to save a bit of money via personal loans.
But many people don’t want to have to apply for multiple financing options, and choosing the right finance to apply for is key in protecting your credit score. For this reason, many people seek an option that is considered guaranteed. Unfortunately, guaranteed personal loans are few and far between. You’ll typically need to wait for a lender to look at your credit report before they will provide you with a loan. If you’re rejected, it will damage your score and reduce your chances of getting approved in the future.
We’ve created this guide to help people better understand their options if they want a guaranteed personal loan. It will provide you with all the information you need in regards to this topic. If you’ve found yourself confused about personal loans and how they are awarded to borrowers, this will be the perfect guide for you. Make sure to read all the content in this article before you embark on your journey to find the perfect lender for you.
The Flaw in the System
If you want to get a guaranteed personal loan from a traditional lender, you’ll find that this isn’t really an option. Traditional lenders don’t guarantee that they will give you a loan until you apply for one. The flaw in the system is the fact that you have to get your credit checked by a company before you can apply – and this credit check also damages your credit report. Every time you give someone permission to run a credit check on your name, the credit reporting body records the fact that your credit has been checked – this can reduce your score by up to 15 points.
This is problematic because you are unable to show that you are a responsible lender if your lender cannot see your credit report. On the other hand, if they do see your credit score, then you end up having a check on your report that damages your score. Luckily, there are a few alternatives that can provide you with more of a guarantee.
This is the most viable way to try and get a guaranteed personal loan. Peer-to-peer lending is an innovative form of money lending that provides users with the ability to borrow money from other regular consumers. Investors will put money up that they are willing to lend to other people within a network. Typically, this money is facilitated through a third-party site that takes a small commission for facilitating the loan.
How Much Can I Borrow?
Peer-to-peer loans are typically only for small amounts. Because there is a decent amount of risk involved for the investors, they try and restrict the amount that you can borrow. If you’re looking to borrow a large sum of money, this is probably not the best option for you.
Are Interest Rates Higher?
Interest rates are much higher than with typical personal loan providers. Again, this is because these loans are not secured and they involve a large amount of risk for the investor who is lending the money. The loans are typically short term though, which means that there won’t be too large of an accumulation of interest. The loans also have way lower interest rates than predatory loans provided by certain lenders, such as payday lenders.
Some Secured Loans
Another form of guaranteed loan that you might be able to find is a secured loan. Secured loans are loans that are tied to the value of an asset that you put up as collateral. Many people use their home or their car to secure loans. If you don’t end up paying the money that you owe to your lender, they will be able to use the asset you have signed over to get back the money that you still owe them. For this reason, secured loans are considered quite dangerous for people who have trouble meeting their financial commitments.
If you have an asset that is large enough to meet the value of the entire loan that you’re trying to obtain, then you can probably convince a lender to guarantee that you will receive the loan. This will also most likely come with certain stipulations, such as the fact that you won’t be able to sell or alter the asset while the loan is still due.
These loans are much easier to get, as lenders are taking on substantially less risk when they give you money. In addition, they also typically have way lower interest rates, which is awesome for someone who is trying to save a bit of money with their financing. Again, we must stress that this is only a good option for those who know they will be able to pay back their loan on time. You don’t want to put your family’s home or car at risk in order to get financing – there are much safer options available.
What to Avoid
When you’re looking to get a guaranteed personal loan, there should be things that you should look to avoid. There are many predators in the lending industry that will try and get you to sign up for loans if you’re desperate to get cash. For this reason, you have to be especially careful when you’re trying to find guaranteed personal loans. So, what should you avoid when you’re applying for personal loans? We’ve listed a few things in more detail below:
Promise of Guarantee
If a lender is offering you a guaranteed unsecured personal loan, you need to be careful. This is typically a catchphrase that is thrown at you to try and lure you into applying through a specific lender. There aren’t many lenders that can actually guarantee you financing, and those who can will typically charge you extortionate interest rates. That’s why you should always read the fine print if you see a claim like this. You should even call the lender and triple check that everything they are claiming is correct.
Head to a few different consumer watchdog groups and make sure that the company has a longstanding reputation in the industry. You don’t want to work with a brand new company that is claiming it can guarantee you finance – they may end up running your credit report anyways!
Payday loans are one thing that we recommend our readers avoid at all costs. Payday loans are loans that are extended to you on the basis of your next paycheck. They don’t require any credit checks at all. In this regard, they are a guaranteed loan. They provide borrowers with the assurance that their loan will be accepted regardless of their credit score.
The problem with this form of finance is that if you don’t pay back the loan on the first payment date, you begin accruing interest at an extremely high rate. Some lenders will charge their customers over 1200% interest! This is miles above any normal rate that you should ever consider paying. For this reason, these lenders are considered predatory lenders. They have ruined the lives of many borrowers around the nation. There are plenty of personal loan providers that will be able to provide people with poor credit histories loans with much lower interest rates.
On top of this, even if you pay back your payday loan on the first due date, the fees for the loans can often be up to 50% of the amount that you have borrowed.
Hard Vs. Soft Credit Checks
One way to help you improve the application process is to aim for lenders that only run a soft credit check on your report. Hard credit checks consist of a full check of your report, they typically allow the lender to see every aspect of your credit report. Soft checks on the other hand are a much more surface level approach to checking credit. They don’t record on your credit report as a full enquiry, which means that they don’t damage your score in the same way.
If you’re looking to do as little damage to your credit report every time you apply for finance, a soft credit check is always your best option. This will also improve your ability to apply for multiple loans without damaging your financial health.
Speak to Your Prospective Lenders
If you don’t like any of the options that we’ve mentioned above, or you need to borrow more money than you think would be available via a peer-to-peer lender, then you should focus on improving your chances of being approved. The best way to ‘guarantee’ that you get approved for a loan is to only apply for finance via companies that you know you will be approved for. Different lenders have different lending requirements. Each type of lender that you opt to apply for will have a range of scores that they typically accept.
You can speak to your lender directly if you cannot find the scores that they typically accept. Ask them a few specific questions to get a better idea of if you will be able to qualify for one of their loans. Make sure to ask you lender these questions:
- Do you have a range of scores that you typically select borrowers from?
- How often do you accept scores below this range?
- Are there items on a credit report that automatically disqualify you from being eligible from receiving a loan from you?
- Is there anything I should know about your application process that will help me improve my chances of being approved?
- Do you do a hard or soft credit check when I apply for a loan?
If your lender won’t provide you with any information on these topics, you’ll probably want to go with another company if you’re trying to guarantee approval. This being said, there are other ways to find information on lender requirements. There are many online forums hat provide you with the opportunity to see what past scores have typically been accepted by borrowers.
These forums have a wide variety of users that will post scores they have had success with. It’s a good way to get a picture of what kind of score a lender is willing to accept.
As you can see, there is no clear-cut answer to guaranteed personal loans. If you’re only looking for a small amount of money to cover an emergency cost, a peer-to-peer loan might be your best option. These lenders will not run credit checks on you and can get you money extremely quickly. On the downside, you will pay a large interest rate. That’s why we suggest that our readers look to work with a personal loan lender that either lets you secure the loan, or allows for people with low credit scores to be approved.
Finding these lenders can be tough, and you want to make sure that you end up working with a company that you can trust. That’s why we’ve created a list of the best lenders in the industry – it’s a great starting point for someone who is looking to try and find a good lender to work with. Make sure to check out our homepage if you want to see who we currently suggest.
Remember, don’t work with payday loans or lenders that are attempting to extort money out of you. Borrowing money can have great benefits, but it can also be extremely bad for you if you approach it the wrong way. If you have any other questions about personal loans and their features, check out some of the other content on our website – we have information on everything!