With so many loans available at the moment, it is not always easy to find out which one will be the best for you. Not all loans are available to everyone and some of the loans which are available to everyone, such as payday loans, can prove to be expensive. One loan that ticks all the boxes is called a guarantor loan and below we have drawn up a list of the top 5 reasons to love guarantor loans.
No. 1 – A Bad Credit Rating is No Obstacle
Although there are a number of great loans currently available, the possession of a bad credit rating will ensure that many lenders cannot turn down some applications quickly enough. Bad credit loans that use a guarantor have been rising up the popularity rankings for this very reason. Innovative lenders have stepped up to offer a type of loan which does not exclude borrowers solely because of their credit rating.
No. 2 – Large Sums Available
The majority of specific ‘bad credit loans’ are only available for relatively small amounts. Payday loans for example are typically available for only approximately £500 and are therefore of limited use. Because of the increased levels of trust derived from the fact that a third party (the guarantor) co-signs the loan agreement, guarantor loans are available in much greater sums of up to £10,000 in some cases.
No. 3 – Need Cash Quickly
We have all been in the position where the filling in of seemingly endless forms means that the application process for a loan can drag on for days, or even weeks in some cases. This is not the case with a guarantor loan. Assuming that the borrower and guarantor pass the relevant checks, it is not unknown for the money to be credited to the borrowers account within a matter of minutes.
No. 4 – Perfect to Consolidate Debts
Guarantor loans are unsecured personal loans, this means that essentially they can be used for whatever purpose the borrower sees fit (within reason of course!). A combination of this along with the fact that considerable sums can be borrowed means that they can act as the ideal debt consolidation tool. By taking out a loan over a repayment period of 5 years, a guarantor loan can be used to bring all outstanding debts into one place. Not only will this make it much easier to budget, but it can also help to significantly reduce the overall level of debt due to the fact that you will only have to pay off one amount of debit interest as opposed to many.
No. 5 – It Can Help to Repair Your Credit Rating
One of the great quandaries facing many people with a bad credit rating is finding the best way to try and improve it. Demonstrating an ability to make repayments in time and in full can play a critical role in this process but an inability to successfully apply for a loan can obviously be a major problem. Because guarantor loans are open to borrowers with a poor credit rating, there is every chance that if you can find someone to back your application, the application will be granted and you will have the chance to demonstrate your new-found creditworthiness. Not only will keeping up with the repayments help you to improve your credit rating, but it will also help to open more financial doors in the future.
Amanda Gillam is Solution Loans's General Manager and has been since 2009. She is also a prolific writer on personal finance issues, and has been quoted numerous times in articles published on 3rd party websites and in press releases. Her...Read about Amanda Gillam