Finance is an essential component of our modern life, as it provides individuals and companies with the funds necessary to meet their financial needs.
However, the traditional lending process often requires a guarantor or some form of collateral to secure the loan, which can be a major hurdle for those who do not have a guarantor or are unwilling to put their assets at risk.
Fortunately, there are alternative financing options available that do not require a guarantor, and they are becoming increasingly popular with borrowers.
In recent years, there has been a significant increase in the number of lending institutions offering financing without a guarantor. These institutions have recognized the need to provide individuals and businesses with access to funds without the stringent requirements of traditional lending institutions.
As a result, we now have a wide range of financing options available, such as personal loans, business loans, student loans, and even mortgages that may not require a guarantor.
While financing without a guarantor may provide borrowers with more flexibility and convenience, it is important to understand the advantages and disadvantages of this option before making a decision.
In this article, we’ll explore the criteria that lenders use to evaluate non-guarantor loan applications, including credit score, income, employment history, and the consequences of loan default. We will explain how to obtain financing of 200,000 riyals without a guarantor from Al Raedah.
What criteria do lenders use to evaluate applications for loans without a guarantor?
Lenders use a variety of criteria to evaluate applications for loans without a guarantor. Some common factors that lenders consider when evaluating loan applications include:
- Credit score: A credit score is a numerical representation of a borrower’s creditworthiness. It is based on the borrower’s credit history, including payment history, outstanding debts, and credit utilization ratio. Credit scores are used by lenders to assess the risk of lending to a borrower. A higher credit score usually means that the borrower is likely to repay the loan on time. Thus it is seen as less dangerous. A lower credit score may lead to a higher interest rate or a rejection of the loan application in the first place.
- Income: The borrower’s income is an important factor that lenders consider when evaluating loan applications. Lenders use the borrower’s income to determine his ability to repay the loan. Generally, higher income borrowers are seen as less risky because they have more financial resources to repay the loan.
- Employment History: Lenders can also look at the employment history and stability of the borrower. A borrower with a stable job history and stable income is seen as more reliable and less likely to default on the loan. Lenders may also consider the nature of the work, such as full time versus part time, and the length of time the borrower has been in the business.
- Debt-to-income ratio: The debt-to-income ratio is a measure of a borrower’s ability to manage his debt. It is calculated by dividing the borrower’s monthly debt payments by his gross monthly income. A high debt-to-income ratio indicates that the borrower has a large amount of debt compared to his income, and that he may have difficulty repaying the loan. Lenders usually prefer borrowers who have a lower debt-to-income ratio.
- Collateral: If a loan requires collateral such as a car or a house, lenders may evaluate the value and condition of the collateral to determine the risks associated with the loan. The lender may request an evaluation or examination of the collateral to ensure that it is sufficient to cover the loan in the event of default.
- Loan Amount and Repayment Term: Lenders can also look at the loan amount and repayment term to determine the risks associated with the loan. A larger loan or a longer repayment period may increase the risk of default. Lenders may also consider the purpose of the loan, the borrower’s financial history and objectives.
It is important to note that lenders may use different criteria or place different levels of importance on these factors, depending on their policies and the type of loan being applied for.
Therefore, it is important to research and compare lenders before applying for a loan to find the best option that suits your financial situation.
These criteria may vary depending on the lender and the type of financing being applied for. Lenders may also consider additional factors, such as the borrower’s age, education, and residency status.
How Al Raedah allows customers to obtain financing of 200,000 riyals without a guarantor
Away from the usual complexities and lengthy financing procedures, Al Raedah offers a range of different features that made the process of obtaining 200,000 riyals in financing without a guarantor more fast and flexible, among these include:
- The process of obtaining financing is very fast and takes place in record time: once you complete the required documents, you will be able to obtain the amount of financing within 7 working days, which means that if you have time-sensitive expenses that need to be paid within a short period, the amount of financing that will be deposited in Your account will be useful and effective for your expenses without delay.
- No need to bother paying monthly installments: SME financing will be paid through daily sales.
- Continuous financing with the growth of the project: This means that Al Raedah Company plays the role of a partner, and whenever the project continues to thrive, the financing process can continue as required.
- Obtaining the ideal financing for your facility: The financing amount starts from 50,000 Saudi riyals and reaches 200,000 Saudi riyals. Therefore, whatever the scope of the financing, there is an amount that is in line with your ambitions. You will find Al Raedah ready to provide help when the necessary conditions are met.
- Flexibility in the repayment period: a repayment period that starts from one year and lasts up to three years, so you can choose the period of time you want.
- Given that Al Raedah Company understands well the needs of customers, it deducts financing fees from the financing amount itself, and does not ask the customer for money to add to his burdens. Al Raedah deals with this matter with transparency and clarity and does not deduct any hidden or surprising fees that have no basis.
Whatever the geographical location of your facility, you will be able to obtain financing throughout the Kingdom of Saudi Arabia.
The application procedure is quite simple, as it can be completed online via the website. Also, there is no need to submit financial statements, but only account statements in order to obtain financing for small enterprises.
Possible consequences of borrowing without a guarantor if you default
Borrowing without a guarantor means that you take out a loan without someone else agreeing to take responsibility for the loan if you are unable to repay it, and in the event of a default, there will be many possible consequences, including:
- Credit Score Damage: Defaulting on loans can severely damage your credit score, it can affect your ability to get a loan, credit card or mortgage, and it can also affect your ability to rent an apartment or get a job.
- Additional fees: When you fall behind on your loan payments, you will likely be charged a late fee. These fees can add up quickly, making it difficult to get back on track.
- Legal action: If you continue to default, the lender may take legal action against you. Such as the issuance of a court judgment, or the withholding of a salary, or even the recovery of collateral if you provided something as security for the loan.
In general, defaulting on loans can have serious consequences, both financial and legal. If you are thinking of borrowing a financing of 200,000 riyals without a guarantor, it is important to ensure that you can afford the loan installments and have a plan to pay it back on time.
Programs to obtain financing to companies of 200,000 without a guarantor at Al Raedah
POS financing program
This is one of the unique financing solutions provided by Al Raedah Finance Company to the owners of small and medium commercial enterprises, who wish to grow and progress and enhance, develop and expand their business by obtaining financing.
Al Raedah provides the appropriate financing for them in a flexible and easy way that helps them achieve their dreams. You can get access to lending which only comes with some simple conditions:
- Obtaining the POS program does not require any sponsor or guarantor.
- There are no monthly installments.
- POS devices must be available for at least three months.
- The maximum financing limit is 7.5 million Saudi riyals, but obtaining it requires a special study.
- The payment mechanism is based on the daily deduction system, which deducts a fixed percentage of the daily profits.
- A fixed administrative fee of 1.5% of the total loan amount (or at least 5,000 SAR) is deducted (one time only).
- Financing can be up to 21% of annual POS sales with a repayment period of up to one year, up to two years if financing reaches 38% of annual POS sales, or three years if financing reaches 50% of annual POS sales.
E-commerce financing program
Through this unique product, Al Raedah Finance seeks to provide benefits to companies and platforms active in the fields of technology and e-commerce, for which Al Raedah offers this lending facility. You can obtain a financing of 200,000 SAR without a guarantor under simple conditions:
- A program dedicated to electronic stores that have a commercial registration.
- Annual income up to 250,000 Saudi riyals.
- You can choose the suitable financing from 6, 9 or 12 month packages.
- Payment is by weekly or monthly transfer.
- The annual percentage rate ranges from 23.52% – 40.69%.
- One-time administration fee ranging from 1% – 1.5%.
- Value Added Tax at 15% applies.
- You can apply for refinancing once you have paid 60% of the financing amount.
Hopefully you now better understand the criteria that lenders use to evaluate applications for loans without a guarantor, and the consequences of defaulting on the loan.
We know how Al Raedah helps you in obtaining financing of 200,000 riyals without a guarantor; so what are you waiting for?
Find out how Al Raedah can help you.