- Emma Anderson
- December 11, 2019
Interest rates are the 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 their 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 a 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
Guaranteed loan from direct lender is one of the categories of personal loans. One can apply for it either in 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 a loan security. They can fetch amount more quickly even if they have the 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 Loans And The Interest Rates
Now, let us turn back to our main discussion. Guaranteed loans are the perfect illustration to understand the variety of the interest rates. It is why we have earlier made clear to you the difference between secured and unsecured loans that come on 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 higher side.
The best example of it is loans without guarantor from direct lender in the UK that are the available on the 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 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 higher and lower side. Some of them can be:
- The amount that borrowers wants to borrow
- The policy of each loan provider
- The capacity of borrowers in fulfilling the obligations
Therefore, make a loan decision only after doing a proper analysis and research. While doing research, try to focus more on choosing the reliable direct lender, who has a good reputation at 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.