As the name suggests, a guaranteed approval loan is a loan that an individual gets regardless of the financial situation or credit history. Lenders require something to analyse a person’s ability to afford the loan. If he allows a loan without the basic minimal checks, the person and lender both will be in trouble.
This is because, as per the standard financial authority in the country, no direct lender can provide a loan without basic credit checks. The credit check includes checking individual identity, employment status, and income proof that reveals the individual’s affordability.
Without this proof, no lender can analyse the amount one can realistically afford.
It is essential in case of bad or poor credit history. Individuals or borrower’s profiles seem risky to lenders in this situation. Hence, a credit check becomes a must. No approval is possible without minimal credit checks.
You must be thinking, “What is this fuss about “guaranteed approval” on loans?”
What does Guaranteed loan approval imply?
To go by the name, “ an individual can get guaranteed approval on a loan regardless of the credit history, income and affordability.” However, no responsible lender lends without conducting basic checks.
Precisely, individuals applying for a loan can get guaranteed approval only if they share the potential to pay the loan back. Individual’s finances and income must reveal the potential to clear the principal and interest amount within the decided timeframe. If his income and present financial circ*mstances reveal stability, he may get “guaranteed” loan approval.
Is it possible to get a guaranteed loan approval with poor credit?
Yes, you may get a guaranteed loan approval despite a low or poor credit history. It is because certain loans, like very bad credit loans, prioritise an individual’s income as the central qualification criteria.
If an individual requires an amount within the income interface, he may easily get a very bad credit loan. However, these are only for short-term and quick financial requirements like- medical requirements, credit card payments, car repair, broken pipes, or any other emergency.
The loan is easy to get and use, so the interest rates and terms stay competitive. Thus, individuals with poor credit history must be mindful of the amount and term they apply for. Choosing a lower amount than your needs is better because it saves you from additional interest rates and terms.
Do you need a guarantor to get guaranteed approval on these loans?
No, as these loans are for individuals with poor credit history and financial requirements, they do not require a guarantor. Lenders provide these loans exceptionally on the borrower’s authenticity of the proof, employment history, benefits and income he receives. Yes, unemployed individuals with benefits and part-time income can also qualify.
It implies you do not need a guarantor, collateral, or a broker to get the loans. It is the best way to finance your needs quickly. However, improve your credit profile before seekingvery bad credit loans with no guarantor and no brokerfacility. Check whether you can pay off some loans or check your credit history for delinquency. These efforts may help you get instant or guaranteed loan approval. Moreover, it may also improve your credit score.
Can an unemployed with poor credit get a guaranteed approval?
Yes, an unemployed individual with a part-time income may get guaranteed approval on bad credit. He must own a valid part-time income apart from just benefits income. This is because some lenders consider additional income while providing small loans. Thus, you can checkbenefit loans from a direct lendernearby. Provide relevant part-time income proof to qualify. You can use the loan for emergencies.
Why the “ability to repay” on a very bad credit loan is important?
You encounter “loans with guaranteed approval” from the firms providing payday or short-term loans. This is because small loans do not require detailed credit checks. The amount one gets here is low, and lenders do not mandate detailed credit screening. He only conducts a soft or basic check that leaves no credit impression. Furthermore, he approves the loan by analysing the income proof.
It helps the lender provide only the amount the person can comfortably pay. It eliminates any fear of default or falling back on payments. Even if the person misses a few payments, the responsible lender helps him by providing flexibility on the repayment schedule. It eases up the deal for him, and he clears the loan timely.
Alternatively, some predatory lenders eliminate “income proof” as affordability criteria. They provide loans with the flexibility to clear the dues later. However, not having the potential to afford the loan later leads to a debt cycle and eventual default. An individual re-borrows to pay the amount and thus keeps moving in the debt loop.
This kind of lender advertises with promises of providing a “guaranteed loan”. These are non-authorised agencies operating individually. Avoid falling for their trap with smart decisions. Yes, this is a “red flag” for your financial well-being.
How do you avoid “guaranteed approval” loan scams?
You can avoid guaranteed approval loan scams by analysing a few signs. If you spot these, leave the table.
1)Demands upfront money
No legal lender demands upfront money on short-term loans for poor credit scores. Avoid the lender if he asks you a sum for a loan of £1500.
2)Unrealistic and fluctuating interest rates
Profit-oriented lenders provide unrealistic interest rates. You may find it hard to believe the interest rates. Moreover, they may change the terms or interest rates in the middle of the agreement. It is very unpredictable. Thus, explore and compare the costs before choosing the lender.
3)Fake address and non-existing name
Always check the company name and profile before dealing with that. Check the social media and google business presence. If it does not exist both ways, probably are fake.
Bottom line
Thus, you can get a very bad credit loan on guaranteed approval if you meet affordability criteria. It is income that lenders check before providing the loan approval. Knowing the eligibility criteria and pre-qualification may help you know the approval status. Moreover, it will prevent you from applying for the wrong loan. Ensure that the lender conducts a basic check before loan approval. It will help you ensure reliability and safety.
Jessica William
Jessica William operates as a Senior Consultant and Chief Content Editor for 10 years at 1Onefinance. She assists the firm in getting a grip on the new lending laws and regulations. She does so by researching the trends, consumer requirements, and new audience preferences. Jessica is responsible for making important financial and administrative decisions.
Apart from helping consumers with the best solutions, Jessica Williams helps them ensure financial stability. She analyse the business data, finances, expenses, and revenue/ income of customers and determines necessary changes. Jessica finished her Doctorate in finance and law and implements her knowledge to the best interest of the firm and customers.
