Personal loans are unsecured loans, which always carry a little risk for lenders (banks and NBFCs). This is why traditional lenders always follow strict eligibility criteria to reduce the risk. In case you have a poor credit score, lenders (BanksNBFCs) require a guarantor for personal loans.
A lack of a guarantor, however, does not reduce your chances of getting a personal loan. You can still get a personal loan. In this blog, we will understand how to get a personal loan with a guarantor in India.
Personal loans are sometimes secured by a guarantor since the lender wants extra security before approving credit. Personal loans are not secured, and therefore, the lender is dependent on the financial profile of the borrower to determine repayment ability.
In case any component of the borrower profile is risky or unpredictable, a guarantor is a backup. Here are all the reasons why lenders require a guarantor:
Earlier, getting a loan meant you needed a guarantor. A guarantor is someone who has promised to pay if you canāt. It was a way for lenders to protect themselves. However, you don’t require a guarantor to apply for a personal loan.
Lenders now rely on borrowers’ credit profile, CIBIL score, income, and repayment history. This is why you no longer require a guarantor to get a loan alone. However, you can still add one to get a higher loan amount or improve your approval chances. DMI Finance offers personal loans up to 10 lakhs without any guarantee or guarantor.
If you apply for a personal loan without a guarantor, the lender still needs something to trust. In this case, your financial and professional stability acts as your āinvisible guarantor.ā Your personal and credit profile becomes the proof that you can repay the loan. Here is how you can get a personal loan without a guarantor:
1. Improve Your Credit Score (CIBIL)
Your CIBIL score is one of the first factors that a lender considers. A high credit score of above 700 allows you to get a personal loan with a competitive interest rate. However, a poor credit score reduces the risk of lending, so lenders offer high interest rates. This is why you must first improve your CIBIL score by paying EMIs and credit card bills on time.
2. Your Income Stability and Fixed Obligation to Income Ratio (FOIR)
Lenders check how much of your income goes toward Equated Monthly Instalments (EMIs). A higher debt-to-income (DTI) ratio can either lead to rejection or higher interest rates.
Ensuring that you meet the income eligibility criteria and keeping the DTI ratio below 40% eliminates the need for adding a guarantor to your application. You can also show additional or disposable income to improve your eligibility.
3. Highlight Collateral or Investments
Even though personal loans are unsecured, many banks and NBFCs consider your financial assets with tangible value as an added layer of security. You can provide the following assets or securities:
This doesn’t convert the personal loan into a secured loan, but it gives the lender more confidence in your repayment capacity.
Here is a quick comparison of a personal loan with vs without a guarantor, you must consider before choosing the right loan and lender:
| Features | Personal Loan without Guarantor | Personal Loan with Guarantor |
| Primary Security | Your credit score (700+) and income | Guarantorās creditworthiness |
| Interest rate | Documents of both the primary borrower and guarantor | Lower |
| Processing Time | 24 to 71 hours (digital process) | Slower (needs verification for both) |
| Documentation | Minimal (KYC + income proof) | As per the eligibility |
| Loan Amount | As per eligibility | Higher due to the reduced risk |
| Repayment Liability | Primary borrower | Shared liability |
| Approval chances | Depends on the borrowerās profile | Higher due to added security |
Here are the steps you can follow to apply for a personal loan with DMI Finance without a guarantor:
You will receive the funds directly into your bank (within 24ā72 hours).
The question isn’t whether you can get a loan without a guarantor, but how to get a personal loan with favourable terms. Instead of being concerned with getting rejected for not having a guarantor, focus on improving your credit profile. This not only improves your chances of approval without a guarantor but also helps you get favourable terms.
1. Can I borrow money without a guarantor if I am self-employed?
Yes. Most lenders now focus on your ability to repay rather than requiring a guarantor. You must provide 2-3 years of ITR filings or bank statements to show regular income.
2. Will not having a guarantor affect the interest rate?
No. Your interest rate depends on your credit score and income, not on having a guarantor. If your credit score is high and you meet the minimum income requirement, a guarantor will not affect your personal loan.
3. What if my loan is denied because I donāt have a guarantor?
You can apply for a smaller loan or check if the lender offers pre-approved loans. Pre-approved loans often consider your banking history and donāt require a guarantor.
4. Is the documentation different for a loan without a guarantor?
Yes, itās simpler. You only need to provide your own ID and income proof. The process is quicker, easier, and more private than a loan with a guarantor.
5. Can I get a loan without a guarantor if my credit score is low?
It isn’t easy, as most banks or NBFCs prefer a score of 700+. Adding a guarantor to your application process improves your chances of approval.
6. How long does it take to get a loan without a guarantor?
Usually faster than a loan with a guarantor. Since fewer documents are needed, approval can happen in a few days, depending on the lender.
7. Do all banks offer loans without a guarantor?
Not all, but mostly lenders offer personal loans without a guarantor.
8. Is it safe to apply for a loan without a guarantor?
Yes, it is safe as long as you borrow from a trusted bank or NBFC. Make sure to read the terms carefully and borrow only what you can repay.
9. Can I increase my loan amount without a guarantor?
Yes, if your income and credit score support it. Some lenders allow you to request a higher loan or top-up later.
10. Can self-employed professionals get unsecured loans?
Yes. DMI Finance offers unsecured personal loans to self-employed individuals with proof of stable income and good credit history.
