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No, you typically do not need a guarantor in order to get a payday loan – and this is the also case when you apply online with Pheabs.

Payday loans are almost always unsecured and your eligibility is based on things like having regular employment, good or fair credit score and can afford to make repayments. The loan amounts are also usually quite smaller, like just a few hundred dollars and are repaid in just a matter of weeks – so using a guarantor for a small and fast loan is not necessarily warranted.

Loans with a guarantor are often used for much larger amounts and can sometimes be associated with car or auto loans, business loans or even mortgages. Equally, they may be used for those with poor credit, as a way to make their loan application more credible and boost their chances of approval. However, the guarantor market in the US is still small and growing, whereas in other countries (like the UK), guarantor loans are a much larger market.

What Is A Guarantor?

A guarantor is someone who agrees to repay your loan if you don’t. Often this will be a parent, close relative or friend. If you fail to meet your loan repayments, a lender can ask your guarantor to pay instead. The guarantor acts as a second port of call if you should default on your loan.

Because of this, to be a guarantor for someone, you must trust them and be willing and able to cover the repayments if need be. A guarantor will also need to be over 21 years old, financially stable and have a good credit history. If your loan lender requires a guarantor, it likely means your financial circumstances cause the lender to want some extra security. For example, a young person with no credit history might require a guarantor for their first-ever credit.

Why Do People Prefer No Guarantor Loans?

For some people looking to take out a payday loan, a no guarantor loan is preferable because it could be faster. If you don’t have a friend or relative who will immediately agree, it may be a worry that needing to find a guarantor will slow down the process too much. Another reason may be privacy. For those who don’t wish to discuss their financial predicament with people close to them, finding a guarantor will pose a problem.

What If I Have Bad Credit?

When searching for a loan with bad credit, some companies will insist on using a guarantor for extra security. But if you don’t have access to a guarantor and have a bad credit score, what are your options? At Pheabs, we work with lenders across the US, including some who may be willing to provide you with a poor credit loan even if you can’t or don’t want to use a guarantor.

Will I Be Charged Higher Interest Without A Guarantor?

Many other factors usually decide interest rates. Because a guarantor adds an extra element of security for the lender, the risk the lender is taking by providing the loan is reduced, and often this will also reduce the interest rate. However, the interest rate is most primarily influenced by other factors such as your financial circumstances and credit history.