How to get a Guarantor Loan
If you, or someone you know, is looking to borrow money - especially with bad credit - instant guarantor loans are a great option. They work just like regular personal loans, except when you’re unable to make the repayments. If that happens then a trusted friend or family member takes over responsibility.
If you’ve struggled to get finance in the past, or you need some financial support fast, guarantor loans provided quickly are an obvious choice.
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The Basics of a Guarantor Loan
These days, your credit score has a big influence over whether you will be able to get finance, especially when it comes to unsecured lending from high street banks. While every lender has their own scoring system, all use the information in your credit report to make their lending decision. If that information means you score low then you may be denied the finance you need.
A loan supported by a guarantee is unsecured lending when your financial history isn’t perfect. When you have someone backing your application in this way, lenders are more willing to accept an application. It works like this:
- Find someone who is willing and able to be a guarantor for you
- Search for the best lender and then apply
- Ensure the person guaranteeing your loan is acceptable to the lender
- Receive an instant payout into your bank account
- Repay at regular intervals, as agreed with the lender
- If you’re not able to make a repayment the person backing you makes it for you
While the rate of interest may be higher than if you had a good credit rating the rate is likely to be lower than other forms of bad credit personal loans.
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Who can be your guarantor?
Choose a trusted friend or family member, someone who knows that you’ll do your very best to make the repayments on time. That person will need to be at least 18 years old – some lenders may require that they are over the age of 21. It’s essential that the person you have chosen to guarantee your application has a good financial history if you want your guarantor loans application to be accepted quickly.
Some lenders may only accept guarantors who earn over a specific amount (e.g. £25,000). Others specify that they must be a homeowner. When you find the right lender, look at their individual requirements so that you can identify the right person to support your application.
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Finding the right loan option
As well as finding a guarantor you’ll also need to pick the right financing. Not all are the same and lenders offer a variety of different choices when it comes to the length of the term and how much it is likely to cost you. Our free search service can quickly help find the options to consider.
- How much do you need and for how long? This type of lending is the same as regular financing in many ways. For example, you can usually access an amount between £1,000 and £15,000 over a period of between one and five years. Although you’ll have the back up of a guarantor it’s still important to ensure that you can afford to make the repayments. If your guarantor has to step in and help you then they may want you to pay back what they have paid to the lender on your behalf.
- Affordability calculations. There are a number of different ways to work out what kind of finance is affordable for you. For example, you might look at all your income and outgoings for the month – is there enough from what’s left to cover repayments to the lender?
- How much is it going to cost? The lender will charge interest on what you borrow until it is all repaid. Typically you could expect the rate of interest to be high if you have a poor credit rating. But for borrowing supported by a guarantee you should find that you benefit from a lower rate of interest than this. Currently, interest rates are between 27% and 50% APR.
- When do you need the money? Not all lenders can offer a guarantor loan with an instant payout but if you need to access the money you’re looking for quickly then this will be the best option. One of the advantages of this type of loan over other bad credit options is that you could have the money in your account in as little as 24 hours after your application is accepted.
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How to apply for a guarantor loan
- Find your options for consideration. Before you make an application you can use the enquiry form to see what your options are. It’s free to do this and, at this stage, you don’t need to have a guarantor confirmed.
- Review the loan deals. You’ll be shown a range of lenders who will lend to you in principle (don’t worry, we won’t call you). Unlike regular comparison sites we won’t confuse things by including those who won’t be willing to lend!
- Choose your lender. When you’ve reviewed the options you’ll be able to select the one that most appeals to you in terms of the APR%, the amount you can borrow and your preferred type of guarantor.
- Find your guarantor. Before you go through and start applying it’s a good idea to have your backer ready. Make sure they are aware of their responsibilities and willing to support you.
- Apply online. You can click directly through from our website to the lender’s application process. You’ll be presented with a form that is pre-populated with your data and which is simple to complete and finish with an e-signature.
- Name your guarantor. This is where you will need to provide the lender with the details of the person backing your application, as well as your own information. The lender will carry out the necessary checks on both you and the person supporting your application, so as to confirm identities and establish financial suitability.
- Complete your application. The simple process is quickly completed. It is possible to receive your guarantor loans instant payout in less than a day although sometimes lenders require some additional information.
Instant guarantor loans are a simple solution to credit issues, helping anyone to borrow even with less than perfect credit. The search and application process is straightforward and fast – use our free search service now to see what your options are.
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