What Is the Difference Between a No Guarantor Loan and a Guarantor Loan?

According to Statista, more than 40 million people in the UK (as at the end of 2018) have been granted some sort of loan or credit. That’s quite a surprising amount of people requiring financial aid, isn’t it? Does this mean that 40 million people in the country have excellent credit scores? No, it doesn’t actually. What most people don’t know is that credit scores aren’t always the final deciding factor when it comes to a loan approval. It probably means that some of the applicants opted for a guarantor loan to ensure that they receive approval on an application that might have otherwise been denied. They also probably didn’t know much about the availability of unsecured no guarantor loans.

If your next thought is “what’s a no guarantor loan?”, then you are thinking along the same lines as millions of other Brits. Not everyone understands how no guarantor and guarantor loans stack up against each other, or what it means for either of these options to exist. Let’s delve a little deeper into what a “no guarantor” and a “guarantor” loan is, and what features set them apart.

A Guarantor Loan Explained

A guarantor loan is a loan that is only granted to you, if another person with a good credit score or collateral co-signs the loan with you. This type of loan requires a co-signatory to sign the credit agreement, which states that the guarantor will repay the borrowers debt if he/she defaults on the agreement and can no longer make payments (or skips payments). Guarantor loans usually involve a bit more red tape and paper work than a ‘no guarantor’ loan. Larger loan amounts are typically granted on co-signed loans and because there is a bit more security for the lender, the interest rate is usually lower than on unsecured no guarantor loans.

 A ‘No Guarantor’ Loan Explained

A no guarantor loan, such as those offered by Multi Month Loans, is an unsecured loan that can be granted to you without a co-signatory or guarantor with a good credit score signing the agreement with you. This essentially means that the applicant is solely responsible for the repayment of the loan. ‘No guarantor’ loans aren’t strictly based on credit score, which means that individuals with a poor financial past (and a credit score to match) can still obtain approval under the right conditions. This approval is based on their current relationship with their existing credit and finances. Unfortunately, unsecured no guarantor loans come with higher interest rates attached.

A Quick Comparison Summary of Guarantor and No Guarantor Loans


Guarantor Loans No Guarantor Loans
·         No co-signatory required ·         Co-signatory required
·         Larger loan amounts granted ·         Smaller loan amounts granted
·         Lower interest rate attached ·         Typically higher interest rate attached
·         Credit score of guarantor is important ·         Credit score of the applicant is valid but not the final decider.

Last Word

Understanding how loan types compare is quite important when trying to decide which financing option is best for you and your business. Take the time to compare the various loan types and make a decision that puts your business in the best possible financial position without compromising the image, cash flow and future financial prospects of the business. Guarantor loans or no guarantor loans – the choice is yours.

Award-winning writer, blogger, social media consultant and charity campaigner. Social Media Manager for BritMums, the UK's largest parent blogging network Freelance clients include Firefly Communications and Save the Children UK. Works with brands on marketing projects. Examples include Visit Orlando, Give As You Live, Coca-Cola and Kodak. Cambridge Law graduate with many years experience working across three sectors in advice, media relations, events, training and project management. Available for hire at affordable rates.

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