Payday Loans

Payday loans are almost entirely different to any form of borrowing. There are no monthly instalments, interest is charged in thousands of percent and they are generally available to anybody who can prove their employment status and is over 18 years old. One other way in which they differ from personal loans is when it comes to the requirement for a guarantor.

If you are borrowing a substantial amount, some banks and lenders will ask that you provide a guarantor. This is usually a close friend or family member. Essentially they will become liable if you are unable to pay off your debt, giving the lender added security. As mentioned, these are particularly enforced when dealing with huge sums or customers who don't have a perfect credit history.

In the case of payday loans, the role of a guarantor is largely redundant. There are very few companies that will request that you provide a second signature in order to obtain funds, purely because your income effectively acts as the guarantee. When you apply you will be bound into an agreement to repay the entire amount on your next payday. This will be done automatically, as such you should have the funds available in your account.

This is one of the reasons that payday loan companies are far more interested in your current employment than in securing guarantors or even worrying too much about credit ratings. As long as you're not borrowing more than you can comfortably repay, you should be able to secure the cash that you're seeking. Of course, if there are major question marks, then obtaining any form of finance is going to prove to be significantly difficult indeed.

There are some niche lenders who will lend to people who can't provide proof of employment or regular income. Most of these will require a guarantor though; however, this is only in very rare cases. In the most part there simply isn't a need, plus if you aren't employed or are unable to prove that you are to a lender, then it may be best for you to not borrow in the first instance. Creating debt that you won't be able to repay is not advised. It will only serve to damage your finances further, both now and in the future.

One of the primary advantages of not requiring a guarantor is the fact that you can keep your borrowing entirely private. Most people don't want to share their financial status with anybody, particularly if you're experiencing a temporary blip. As such you can apply, get the funds and repay without your close ones ever needing to know or being affected in any way.

So if you don't want to involve anybody else in your finances, a payday loan is a great short-term solution. It's not ideal for all situations though, so make sure that you check out alternatives and make a decision based on your circumstances and the potential costs involved. But one thing that you should never need when applying is a guarantor.