Loans with Guaranteed Approval

Discover what a guaranteed loan entails

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Guaranteed Loans for Bad Credit

Getting a guaranteed traditional personal loan is often a complicated process. You need to provide a lot of documentation, show your good or excellent credit score, and submit a detailed application.

People with bad or poor credit have the most difficulties with borrowing from personal loan lenders. They are often denied after providers check their credit reports.

Loans with “guaranteed” approval serve as a solution for those not qualifying for traditional borrowing money options. Although they cost significantly more, they are more accessible.

How Do Bad Credit Loans with Guaranteed Approval Work?

A bad credit loan with guaranteed approval is a type of personal loan, usually available with no credit check. Even if a lender performs a credit inquiry, it is not a barrier for people with low credit scores to obtain a guaranteed loan.

Although the loan is called “guaranteed,” no lender can guarantee approval to all borrowers. They conduct soft credit checks and allow people with poor credit to get financing but offer higher interest rates and shorter loan terms.

How to Get Approved for a Loan with Bad Credit?

Many lenders allow borrowers with bad credit scores to borrow money, requiring only basic information and bank account details instead of conducting a hard credit check.

To get approved for a loan with bad credit, you need to be a U.S. citizen of at least 18 years old. A lender will ask you to prove your stable income (usually $800 to $1,000) from any source. It can be Social Security, disability insurance, child support, etc. You should also have an active bank account where a lender can send you the loan amount. Lending companies need your phone number and email address to contact you.

To increase your approval chance, try to provide as much information to the lender as possible and ensure it is correct.

Guaranteed Loans for Bad Credit Borrowers

What Are the Types of Guaranteed Loans?

Guaranteed loans are typically high-interest borrowing options that many financial experts recommend to avoid. These loans include the following types of loan:

Payday Loans

Payday loans are short-term, unsecured loans taken out on a borrower's next paycheck. Lenders don’t require a hard credit check and focus mainly on the applicant’s stable income. Therefore, you can get approved for a guaranteed payday loan with a credit score below 580.

This type of loan often comes with unaffordable interest rates that can reach 400% APR. Many states (New Mexico, Oregon, Maine, etc.) restrict the loan’s amounts and interest rates to protect consumers from getting into a debt trap. In Arizona, Colorado, New York, and many other states, payday lenders can’t operate at all.

Title Loans

A title loan is a secured loan where your vehicle serves as collateral. Unlike a payday lender, your car title loan provider can seize your auto if you fail to repay the debt. Title loans are considered high-risk borrowing options. Their high interest rates, reaching 300%, may result in losing both your car and money or getting into a cycle of debt.

Due to the high risks involved, states like North Carolina, New Jersey, Colorado, Nebraska, and others ban car title loans on their territories. In New Mexico, Missouri, Minnesota, Illinois, etc., they operate under specific restrictions.

Pawnshop Loans

A pawnshop loan is a type of loan where you provide collateral to obtain a loan. It can be jewelry, electronics, or any other valuable item. Collateral makes you a less risky borrower, so a lender can give you money without a credit check. If you don’t repay a loan, it can seize your item of value.

Installment Loans

Personal installment loans work similarly to payday loans and title loans but offer larger loan amounts and longer repayment terms. Installment loans are generally cheaper than the previous two options, but lenders typically require higher interest rates for bad credit borrowers. You can also repay your guaranteed installment loan early to save on interest payments. However, a lender may charge you a prepayment penalty.

Risks of Guaranteed Loans

The main risk of a guaranteed loan is its cost. Payday loans, installment loans, title loans, and pawnshop loans usually come with extremely high interest rates and fees. All the extra charges can even exceed your loan amount.

Statistics show that around 90% of borrowers can’t repay their payday loans by the due date. As a result, they take a rollover and pay additional costs to extend their repayment period.

As repaying guaranteed loans with interest is often unaffordable, people get into a debt trap, and it is extremely difficult to recover. In the case of title loans and pawn shop loans, they also lose their collateral. Therefore, be sure you can repay the debt on time before borrowing.

Alternatives to Guaranteed Loans for Bad Credit

If you don’t want to risk taking guaranteed loans for bad credit, you can consider other borrowing options available for people with a fair or poor credit score:

  • Payday alternative loans (PALs);
  • Credit card cash advances;
  • Secured loans;
  • Unsecured personal loans with cosigner;
  • Borrowing from family and friends.

Analyze your financial situation and choose a solution suitable for your needs.

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Written by Gregory Allen

Updated on Feb 5, 2024