What Is a Guaranteed Personal Loan?
- A “guaranteed personal loan” can be a risky way to get cash quickly, often without a credit check.
- Guaranteed loans can have high rates and fees, short terms or might involve lending against your car or other valuables.
- Guaranteed loan lenders target borrowers with poor credit or limited credit histories who don’t qualify for traditional loans.
With a guaranteed personal loan, you are almost “guaranteed” approval, no matter your credit history. They come in different forms, including payday, pawn shop and car titles loans.
But guaranteed loans can have very high interest rates or can risk your car or possessions for a fraction of their cost, so watch out before you sign on the dotted line.
What is a guaranteed personal loan?
Guaranteed loans are an option for people with bad credit who might not be able to borrow money with a traditional loan. Lenders may advertise instant approval and skip the usual credit check.
But that doesn’t mean everyone can get a guaranteed loan — you may still need proof of income and a bank account — but they’re much easier to get than other personal loans.
But the easy approval comes at a cost. Most guaranteed personal loans charge high interest rates and fees, and the loan term is often short, meaning they want the money back quickly.
In some cases, the term “guaranteed loan” means something very different: a loan backed by the government or other party. If you default on the loan, they will pay it. As a result, lenders will usually give you a lower interest rate or better terms.
Some examples of this kind of guaranteed loan include:
Types of guaranteed personal loans
Guaranteed personal loans may promise fast approval and easy access to cash, but how they work and the risks they carry can be different, depending on the type.
Payday loans
How to get a payday loan: You can apply for a payday loan online or in person at a storefront lender. You must provide a government-issued ID, a recent pay stub or proof of income, and an active checking account or prepaid card account.
How they work: Payday loans are short-term loans for small amounts — usually $500 or less — meant to be repaid by your next payday. Lenders usually don’t check your credit but require proof of income. These loans are fast and easy to get, with funds often available the same day.
Some lenders will have you give them a postdated check or withdrawal authorization. They then use this to take your repayment directly from your bank account.
Risks of a payday loan: Payday loans can have interest rates of 300% or more, depending on the state. If you can’t repay the loan on time, you may be able to roll it over into a new loan, but this can trap you in a cycle of debt.
Pawn shop loans
How they work: Pawn shop loans take something from your personal property — like jewelry, electronics or tools — and lend you money against it. The pawn shop will usually lend you 25% to 60% of the item’s resale value.
If you repay the loan on time, you get your item back. If not, the pawn shop keeps it and resells it. There’s no credit check involved, and the loan terms are usually short, with interest and storage fees added.
How to get a pawn shop loan: Visit a licensed pawn shop with an item of value and a valid photo ID. The shop will assess the item’s condition and resale value to give you your loan amount, and you can walk out with the cash.
You’ll receive a pawn ticket outlining the loan terms and repayment deadline, which is usually 30 to 60 days.
Risks of a pawn shop loan: You risk losing your item forever if you can’t repay the loan (or if you lose your pawn ticket).
Car title loans
How they work: Car title loans let you borrow money against your vehicle. You must own the car outright or at least have most of it paid off to qualify. The loan is usually 25% to 50% of the car’s value.
You can keep driving your vehicle, but the lender can repossess it if you don’t repay the loan in time. Some lenders will have you install a device that will locate your car to make repossession easier if you don’t pay.
How to get a car title loan: You can apply online or at a car title lender’s office. You’ll need a government-issued ID, the vehicle title, proof of income and proof of insurance. Many lenders will also want to inspect the car and get a second set of keys.
If approved, you’ll sign over the title temporarily and receive funds quickly, often on the same day.
Risks of a car title loan: Losing your car if you don’t repay the loan is the main risk. You may also face interest rates well above 300%, sometimes with additional fees. These steep costs can sometimes turn a short-term money solution into a long-term debt problem.
No-credit-check loans
How they work: No-credit-check loans are meant for borrowers with bad credit or no credit history. Instead, the lender looks at your income, employment or other factors. Approval isn’t guaranteed but is usually easier to get than with a regular personal loan.
How to get a loan with no credit check: No-credit-check loans may be available from online lenders, storefront lenders or peer-to-peer platforms. You usually just need an ID and proof of income. You may get the funds quickly and deposit funds into your account within one or two business days.
Risks of a no-credit-check loan: High interest rates and strict repayment rules make these loans difficult. Also beware of additional fees, and read all terms carefully before accepting the offer.
Alternatives to guaranteed personal loans
You have options if you need cash fast but want to avoid the high costs and risks of guaranteed personal loans.
Personal loans
Traditional personal loans from banks, credit unions or online lenders may be a better choice than guaranteed personal loans, even if you have bad credit or no credit.
While they usually require a credit check, lenders also consider other factors like income, employment history and debt-to-income ratio (how much of your credit you use).
These loans usually have a fixed interest rate, with set monthly payments over a term of several years.
Lenders also have personal loans to help you build credit if your credit score is weak. (You can check your credit score for free with LendingTree Spring.)
Payday alternative loans
Many credit unions offer payday alternative loans (PALs) as a safer substitute to payday loans for members who need a small amount (often between $200 and $1,000).
Interest rates are capped at 28%, and repayment terms range from one to six months, giving you more breathing room than with a payday loan.
You usually don’t need a credit check, but you usually must be a credit union member for at least one month before applying.
0% APR credit card
A 0% introductory credit card lets you make purchases or transfer a balance from another card for free during a set promotional period (around nine months on average).
If you qualify, this gives you the flexibility to cover urgent costs or repay an expensive credit card balance without interest, as long as you pay it off before the promotional period ends.
You will normally need credit approval, but some cards are available for people with just fair credit. Just be aware of any balance transfer fees or high interest rates that kick in after the promotional period.
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