Are no-guarantor loans useful for gig economy earners?
Are no-guarantor loans useful for gig economy earners?
Blog Article
Gig workers work on a project basis, rather than as regular employees receiving a salary. They may operate as contractors, freelancers, self-employed individuals, or temporary professors, etc. Unlike those who are employed, their income remains inconsistent. It largely depends on the project timeline, expertise needed and the total experience the person shares.
As a temporary worker, one struggles to fetch instant finance for their needs. It is because of seasonal income. Thus, lenders require additional documentation, such as bank statements, tax returns, and payment histories from the gig platforms. Some may also require a guarantor with a regular income and a good credit score.
It is not impossible to get a loan without additional securities like a guarantor. If you can afford the loan individually, you may qualify. Loan providers typically analyse the person’s income, credit score, credit history, pending bills, defaults, and benefits they receive. Individuals who are unemployed and receive other government cash assistance may qualify with a relevant part-time income.
Who qualifies as a gig worker in the UK economy?
A gig worker is someone who works according to a task basis. It may include contractors, self-employed individuals, teachers, and freelancers. Gig workers are also known as self-employed instead of employed due to tax reasons.
For this reason, they do not qualify for facilities, health insurance, workplace pension or paid leave. However, they can legally claim the national minimum wage and government benefits.
Working in a gig economy means flexible hours, inconsistent income, and tax complications. Moreover, they need to check an individual pension plan as they don’t have one.
Why do gig workers prefer loans without a guarantor for their needs?
No guarantor loans help self-employed or part-time workers get cash instantly for their needs. Unlike traditional personal loans, these loans grant individuality to the worker. Here are some reasons why part-time workers prefer it:
- To counter cash emergencies individually
Most individuals prefer the loan to meet an emergency bill payment or small repairs. With no liability like a guarantor attached, they feel more relieved to get a loan without involving the other person unwillingly. One may get the loan immediately for any business need like paying the rent, the bill or the suppliers.
- Re-track finances and boost credit score
Alternatively, getting a loan and paying it on time helps improve the credit score. It is ideal for gig workers whose scores fall considerably due to inconsistent income and pending bill payments. Thus, it is an opportunity to re-track finance and meet requirements simultaneously. It helps them identify and eliminate the additional expenses affecting the credit score.
- Quick loan turnaround times
Another immediate benefit of no guarantor loans for gig workers is the turnaround times. One gets the cash the same day, quickly after the loan approval. They don’t have to wait and delay the urgent bill payment until the next day.
- Flexibility on repayment period
Additionally, every individual gets the choice to select the best repayment term according to their income type and frequency. It grants relaxation to the workers to pay when the cash is available. Thus, it prevents one from entering a loan default or missing a payment.
- May get the loan with bad credit
One may qualify for a guarantor loan despite a bad credit history. It is because the amount you can get here is £10000 (max). Moreover, you get one only based on your affordability. If you can repay the dues timely, you may qualify. Most loan providers offer flexibility to gig workers regarding the repayments. You can reschedule if you struggle or the payment situation changes.
Can you get the income-based loans without a credit check?
No, you may not get the earning-based or payday loans without the basic credit screening process. Every application undergoes the initial credit assessment. It is a mandatory process that one cannot skip to get a loan.
However, you may get payday loans with no credit check and no guarantor online. The credit assessment does not affect the credit score at the time of the basic quote. The loan provider conducts a detailed check after you agree to proceed with the approximate quote.
It may affect your credit score temporarily. Thus, the no-credit-check process helps you know the approximate amount you may get on the loan. Accordingly, you may compare the loan options. Experts provide it quickly after they receive your application. They do so based on the information they receive through the form. It is not the final quote that you get. You get the final one only if you proceed with the quote.
What are the eligibility criteria for no-guarantor loans for gig workers?
The eligibility criteria for loans without a guarantor for gig workers may vary according to the provider. Individuals with consistent projects under their belt and a long earning history may qualify. Here are the basic eligibility criteria to get a loan without a guarantor as a gig worker:
- Earning and are above 18 years of age
- Have been in operation for over 6 months
- Have a separate business account and use it for the very purpose
- Must hold a clear record of the bank statements, tax statements, project invoices and payment proof
- Your basic income should be enough to support the loan repayments
How to get no guarantor loans for gig workers responsibly?
Whether you share a long credit or business operating history, borrowing responsibly is important. Getting a loan as a self-employed individual is challenging. You may get no guarantor loans for gig workers from direct lenders by taking the following actions:
- Check affordability before applying
Calculate the earnings and monthly expenses. If you receive income quarterly, then research accordingly. Check how much you save every month. Next, identify the approximate instalment amount that you must pay after borrowing a particular amount. It will help you understand how much you should borrow and pay monthly.
- Prepare a budget for the repayments
Next, optimise your present expenses and monthly outgoings to pave the way for instalments. Check which expenses you can drop. It will help you save more and create a scope for the loan repayments. Budgeting is important; otherwise, your finances may fall. Alternatively, budgeting and paying instalments will repair your credit score.
- Avoid borrowing excessively on a loan
As a gig worker, you must practice financial discipline on all fronts. It also includes deciding the right amount to borrow. No matter how catchy and attractive the offer seems, don’t borrow beyond what you can repay. It may become problematic for you later.
Bottom line
Yes, no guarantor loans are helpful for gig workers as they offer the flexibility and independence to meet financial needs. It offers an opportunity for one to rebuild finances from scratch. However, one must be conscious while considering a loan without a guarantor. Borrow responsibly by seeking an amount which you can afford to repay. Pre-qualify to determine the approximate charges and decide accordingly. Report this page