No Guarantor Loan: A Brief Explanation
New technologies and evolution in the mechanism of technology always present improved opportunities. The FinTech Industry of the UK also wants to understand the potential risks and its impact on the business. Moreover, the industry has also concerns regarding the convenience of the borrowers. To provide ease of access, the unsecured lending industry of the UK has designed an array of financial products, which have a major contribution in reshaping this particular industry. The FCA (Financial Conduct Authority) defines High Cost Short-term Loans as unsecured loans taken out for less than a year. One such product, which gained a lot of popularity in recent years, is No Guarantor Loan. For availing this credit product, a borrower does not have to present a secondary borrower’s name or a guarantor. A report released by Citizens Advice in 2017 states that the number of guarantor loan problems in the United Kingdom rose by 40% as compared to 2016. Similar issues created a demand for Loans with No Guarantor.
However, the economic context for UK households remains grave and difficult. With low unemployment level, current chaos due to the Brexit, many families have become financially fragile. All such situations make it difficult for an individual to manage the sudden dips in income level and unexpected expenditure. A recent release made by Office for National Statistics on 24 January 2019, states that the average weekly household expenditure in the UK was £572.60 in the financial year ending 2018; the highest weekly spend since the financial year ending 2005.[i]
Many people are observed to opt for a loan with no guarantor as it eliminates the demand for a secondary borrower, who will be liable to pay off the debt if you fail to repay the loan. These types of credit products are easily accessible online. An individual looking forward to borrowing such loans has to go through the complete procedure online. It saves a lot of time and the hassle of tedious documentation work, which were utterly necessary decades ago.
No guarantor loan is an easy-to-go option for many people in the UK as it is easily accessible. A borrower can repay the loan amount taken in affordable monthly repayments, which will not disturb the regular monthly budget of a household.
It has been noticed that there is a high competition among the lending companies and this can portray as an advantage for the borrower,as the borrower has the option to explore other available offers. This opens up a new window full of different offers at competitive rates. The short-term credit market is expanding remarkably. The FCA to help borrowers trapped in the cycle of borrowing performs periodic regulatory interventions in the unsecured lending landscape. The emerging UK market will continue to go through such regulations to keep a tab on an individual’s borrowing behaviour. Such measures are important to reduce the overall household debt of the UK. However, certain unavoidable situations crop up in between, which demands urgent monetary attention. To solve those instantly, these products can be quite useful.
Click here to explore all short-term credit products.
[i]https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/expenditure/bulletins/familyspendingintheuk/financialyearending2018
