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Are guarantor loans a payday loan alternative?

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If you need a loan for over four weeks payday loans can become very expensive.

A guarantor loan could be a more cost-effective alternative, so can be a good alternative.

We have over 27 of the UK’s best lenders giving you the very best choice of guarantor and ‘no guarantor’ loans.

  • Lower interest rates as you have a guarantor

By providing a guarantor with a clean credit history, the lender can afford to charge you less as there is less risk of you not paying back the loan.

Your guarantor will typically be a family member or friend, someone who knows and trusts you.

  • It does not matter if your credit rating is poor

The lenders look at the status of your guarantor rather than your credit file, so if you have missed payments say on a previous loan, a credit card, mobile phone, or even a CCJ then this is not a problem.

  • Just like a payday loan, you can pay off the loan at any time

One of the advantages of a payday loan is their flexibility, you can pay them off at any time. Most of our lenders have flexible payment terms that allow over-payments or paying off the full balance at any time.

Please note our lenders do change their terms and conditions from time to time, so make sure before you take out a loan with them that there are no over-payment or early repayment, fees.


 

Video: An affordable alternative to a payday loan

 


 

The differences between payday and guarantor loans

The following table briefly summarises the differences between a payday and a guarantor loan:

Payday

Guarantor

Bad credit historyPoor credit rating allowable, though precise criteria range from lender to lender.Poor credit rating allowable, though your guarantor will require a clean (or only very slightly imperfect) credit history
Guarantor requiredNoYes
LengthDesigned to be taken for up to four weeks, up to your next payday. If you take the loan out for longer periods, the high-interest rates can make this form of borrowing very expensiveSmall loans are available from six months and larger loans for up to five years, so there are many more options. But if you want a loan for only up to four weeks, payday could still be an option.
AmountLoans typically range from £50 to £2,000 (though the upper limits are always changing)Loans currently range from £500 to £15,000, so much larger loans are available
Representative APR?Rates are typically up to about 1,500% representative APR (though this is constantly changing from lender to lender).When borrowing between £500 to £15,000 the representative APRs range from 36.9% to 49.9%.
Early repayment and over paymentsThis is a commonly allowable feature with payday loansThis is a commonly allowable feature with guarantor loans
Discrete online applicationYesYes
Same day funds availableYes – with many lendersYes – with our lenders smaller loans, on receipt of a completed application form
ReputationPayday loans have a poor reputation mainly due to very high-interest rates. If you choose a reputable company and pay the loan back within four weeks, then this reputation should not worry you.Guarantor loans are less well known, but this does not mean they are not an option to consider. They can be more cost-effective, especially if you need the money for more than four weeks.

 


Frequently asked questions

  • Can you get payday guarantor loans?

No 👎. Read more here.

  • Can I find out more about guarantor loans?

Absolutely, we strongly believe that you should find out as much information as you can before doing anything.

Please check out our page What is a guarantor loan – The facts which give plenty of detailed information.

  • I would also like to find out more information about the guarantor

Finding a suitable guarantor is one of the most common questions, for more information on this please see our page Being a guarantor – all you need to know

 


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