HOW A DIRECT LENDER VARIES INTEREST RATES ON GUARANTEED LOAN?

Home / Blog / HOW A DIRECT LENDER VARIES INTEREST RATES ON GUARANTEED LOAN?

Interest rates are a vital part of a loan process. It can be considered as the ‘main income’ source of the lenders and a ‘main concern’ for the borrowers. Lenders charge rates on them each loan deal as it is necessary for them. At the same time, the applicants have to be extra careful in choosing and paying the loan rates.

The entire loan process requires better coordination between the lender and the borrower. A trust factor is essential and the interest rate is the base of that trust.

In the matter of Guaranteed Loan

A Guaranteed loan from a direct lender is one of the categories of personal loans. One can apply for it either in a secured or unsecured way. When someone applies with collateral, he can avail a large amount to fulfil the long-term financial purposes.

In applying for the unsecured manner, borrowers do not need to submit any asset as loan security. They can fetch amount more quickly even if they have poor credit scores.

When we see the trends of the UK marketplace, we can find out that the demand is primarily for the unsecured guaranteed loans. They are more useful during the financial emergency.

Guaranteed loan and the interest rates

Now, let us turn back to our main discussion. Guaranteed loans are the perfect illustration to understand the variety of interest rates. It is why we have earlier made clear to you the difference between secured and unsecured loans that come on a guaranteed basis.

To understand the interest rates, we need to go more deep.

Guaranteed loans with low-interest rates

The lenders have the confirmation from the borrowers that they will repay the borrowed sum under the given schedule. In such a scenario, the loan approval comes early and on a guaranteed basis. Another main reason is that borrowers have given the collateral, which the lender can use if they default on loan repayment.

In the condition of low-interest rates, borrowers are required to either provide loan security or present a guarantor. If they choose the guarantor, then remember that a particular person should have a good credit history and he must be a homeowner. Only in that condition, the lender would agree to keep the interest rates on the lower side.

Other benefits apart from low-interest rates are:

  • Acceptance even on the bad credit scores
  • Tenants can also apply
  • A large amount can be borrowed

These benefits are crucial in your financial revival.

Guaranteed loans with high-interest rates

The lenders put high-interest rates on guaranteed loans when the borrowers do not have collateral and guarantor to present. In this situation, only the income source of the borrowers plays a crucial role.

The lenders are satisfied that borrowers can repay their amount from their monthly income, but still, the absence of other obligations brings loan rates on the higher side.

The best example of it is loans without guarantor from a direct lender in the UK that are available on a guaranteed basis. In this, borrowers get loan approval even if they do not have any person to co-sign the loan amount.

These loans may be useful during an urgent situation, but they often available with the high-interest rates. However, borrowers’ bad credit does not put any obstacle and the lender transfers the funds on the same day basis.

A Comparative Conclusion

By looking at the above explanation, we can conclude that there are a few factors that keep interest rates on the higher and lower side. Some of them can be:

  • The amount that borrowers want to borrow
  • The policy of each loan provider
  • The capacity of borrowers in fulfilling the obligations

Therefore, make a loan decision only after doing proper analysis and research. While doing research, try to focus more on choosing a reliable direct lender, who has a good reputation in the financial market. In the UK, there are some online lenders that are providing guaranteed loans on acceptable terms. You can choose one of them and ensure stability in your financial life.

About Author

about author

Adrina Martinez

Adrina Martinez is a financial adviser at Personal Loan Lender. She has an experience of almost 6 years in the finance industry. With her excellent efforts, the company has been able to provide myriad of borrowers with financial assistance. Her incredible role is to explain various options to borrowers depending on their credit history and income statement, which has benefited both borrowers and Personal Loan lender. With genuine guidance, borrowers get personalised deals without any risk of falling in debt and the lender gets money back timely without chasing borrowers.