The lending industry has evolved much over a number of years. With flexible lending practices, it has become convenient for borrowers to secure a loan. However, there are some borrowers who struggle to get the loan for one reason or another. In most cases, a poor credit rating is to partly blame for refusal. It is a blow when you are in urgent need of money.
In order to allure such borrowers, some lenders claim to provide you with no refusal loans. No refusal is a marketing term used to make borrowers believe that they can qualify for a loan in any financial circumstances. The fact is that no sort of such loans exist in the UK. If you encounter a lender offering such loans, do not apply for a loan from them – because they are scams.
No registered and ethical lender is permitted to make any claims like this. A lender can’t approve any loan application without assessing your credit report and financial documents. It is a legal requirement in the UK for any lender to run affordability checks. No lender can lend money to anyone who is already struggling with their finances. Otherwise, it will throw you into a deep hole of debt.
No refusal loans are scams
Any lender providing you with these loans is not genuine and registered. You should never apply for any loan from these lenders. The problem with no refusal loans is that they are not subject to an affordability check. Lenders typically assume that your credit rating is already bad and therefore do not bother to run a credit check. As a result, they charge very high interest rates.
Moreover, no refusal loans are very small in size. Hardly any lender lends more than £500. You will be required to pay them off in full on the due date. If you fall behind the due date, interest penalties and late payment fees will be added to your account. It will quickly add up your debt. Eventually, you will find yourself caught up in an endless cycle of debt.
Lenders proving these loans aim at making profits from gullible borrowers. The FCA has clearly warned people against such lenders. You should carefully check the registration details of a lender on the FCA website. Check the lender’s website as well to know if they are registered. Most of the lenders provide their registration details at the bottom of their home page or “about us” section page. You cannot make any complaint to the FCA if you borrow money from unregistered and unethical lenders.
How to find a responsible lender
Financial emergencies can happen at any time. It is impossible to put off them. Therefore, some lenders are quite flexible with their lending practices. You can find a responsible lender meeting your financial needs.
- Research about the lender
There are several lenders selling the same sort of financial products. You should carefully get information about them from their website. Go the official website of the FCA and paste the URL or the lender’s name in the search bar to know whether the lender you are looking to apply from is genuine. If you get no information, the lender is not registered at all. You should immediately switch to another lender.
Once you have picked a lender to borrow money, compare interest rates and APRs they charge with other lenders. It will give you an idea of how much the loan will cost you. The quotes offered to you are not actual rates as they have been determined based on financial details you provide.
You should also check how responsible a lender is. TrustPilot is a review site where you can go and read reviews by different borrowers. You can trust a lender if they have at least a 3-star rating. Social media sites can also let you know about the lender.
- Improve your credit score
Having a good credit score will help you keep scammers at bay. No refusal loans see appealing to those whose credit history is very bad and they cannot afford to have another credit check. When your credit rating is good, you will not have fear of losing your credit points due to hard inquiries. You can improve your credit report through the following methods:
- You should pay off all your bills on time.
- Keep your credit utilization ratio as low as 25%.
- Your debt-to-income ratio should not be more than 30%.
- Pay off your credit card balance on time.
- Seek a credit builder loan to improve your credit score.
It can take some time to do up your credit score. Consistently work in the direction of making your credit report better.
- Read the fine print
When you receive a loan agreement, you should jump the gun. It is your responsibility to read all terms and conditions. No lender is bound to disclose everything about their financial products before handing you the agreement. Make sure you read the fine print because that discloses how good is actually a deal.
Do not hesitate to ask a lender about any term if you do not know its meaning. Not until you sign the agreement will you be bound to pay off the debt. weigh up carefully the upsides and downsides. Do not sign the loan agreement if you think you should not.
The bottom line
No-refusal loans do not exist in the UK as no responsible and registered lender can give you an approval guarantee without a thorough check of your credit score and income sources. Beware of lenders providing these loans because they will charge extortionately high interest rates, and a result, you will fall into debt.
You should do proper research to know whether the lender is registered with the FCA, compare interest rates and read a loan agreement carefully. Make effort to increase your credit score as well.
Williams Adams is the Senior Content Writer and Loan Advisor at Loansevents. He is passionate about finance writing and has written thousands of blogs for the top platforms worldwide. In more than 13 years of experience, he has worked with leading lending firms in the UK providing various loans. At Loansevents, Williams does the major task of writing researched-full blogs on multiple loans and financial concepts. He has done MBA in Finance in the UK to back his finance skills.
