For some people getting a loan can prove to be more difficult than it should be, particularly is the have either a poor credit rating or no credit history at all. Guarantor loans offer an attainable solution. A guarantor loan is an unsecured loan which is generally available for sums between £500 & £10000 and must be repaid over a term not exceeding 5 years. The difference between guarantor loans and standard unsecured loans is that they require the borrower to have a second person acting as a guarantor. Generally, these loans have been designed to provide an option for anyone struggling to obtain a loan through traditional means – regardless of whether it is through poor credit history or any other reason. These loans also allow you to borrow a higher amount than you would be able to normally with poor credit.
Any with serious financial commitment, it is crucial that you fully understand the agreement into which you will be entering. You do not want to sign on the dotted line only to be facing disaster further down the road. The obvious risk posed by a guarantor loan involves the guarantor being left ‘holding the proverbial baby’, should the borrower fail to make the repayments as scheduled. This risk will cease to exist assuming everything runs as intended. The person acting as the loan guarantor is simply a friend, family member or anyone else with whom the borrower shares a high degree of mutual trust who will sign an agreement with the lender stating that if the borrower cannot make the repayments, they will. Choosing the person to act as your guarantor is not a decision that should be rushed. Remember, and we cannot emphasise this point strongly enough, if something unavoidable happens and you can no longer make your repayments , your guarantor will have to pay. If everything runs smoothly, this will not happen but once the agreement has been signed there is no backing out. Each individual lender can have slightly different criteria which must be met in regards to what they look for from a guarantor but as a general rule of thumb, they ask that your guarantor is:
- Someone with a good credit history and who is a homeowner
- At least 18 years old (some lenders require your guarantor to be over 23)
- Financially stable with enough disposable income to make monthly payments
- Not financially dependent on the borrower
Wide Ranging Benefits
Individuals with poor (or no) credit histories, such as students or anyone still living with their parents, may benefit greatly when a parent or relative agrees to guarantee their short- term loan. This is because guarantor loans offer the opportunity for the borrower to demonstrate their ability to maintain a regular repayment schedule. Guarantor loans enable borrowers to obtain fairly sizeable cash advances with favourable interest rates and repayment terms. This type of loan offers the chance to improve their circumstances and financial status or credit-worthiness while gradually repaying the short term loan. Because bad credit loans UK such as guarantor loans are personal loans, they can be used for any purpose, such as debt consolidation, home improvement or to pay for a car, holiday or even a wedding. Perhaps most importantly of all they offer a highly effective way to repair a poor credit rating.
For detailed information about guarantor loans and for other loan options visit Solution Loans