Guarantor Loans Personal
What Are Guarantor Loans?
Guarantor loans are a personal loan that has the payments guaranteed by someone else. This means that if the person borrowing the money was unable to make repayments. The lender is legally able to ask the guarantor to pay instead. Both you and the guarantor will need to sign the loan agreement.
Guarantor loans have become more popular since the financial crash of 2008. The recession that came about because of this crash caused a lot of people to get into financial difficulties. Which meant that their credit ratings were adversely affected. Guarantor loans allow people to get the money that they need, even if their own credit rating is not that good. Read More >>
What Are The Advantages Of Guarantor Loans?
A guarantor loan may be available to you even if you have a poor credit score. This may be because you have had financial problems in the past or because you are yet to build up a credit history of your own.
If you repay a guarantor loan on time then your credit rating may improve. This will make it easier for you to get credit from other places in the future.
What Things Do You Need To Be Aware Of?
When you are considering a Guarantor loan it is really important that you make sure you can make the repayments. If you are unable to do this, then your guarantor will be chased for payment. If you have asked a friend or family member to be your guarantor then this can cause a strain in the relationship.
Another thing to be aware of is that the guarantor will need to have a good credit history. It is this that will give the lender the confidence that they need to grant the loan. Some Personal loan companies will also specify that the guarantor needs to be a home owner. Although the loan will not be secured against the home.
You cannot ask someone who is linked to you financially to be a guarantor. Therefore you are not able to ask your spouse or a partner that you live with.
How To Apply For Guarantor Loans
Some companies will let you make an application for guarantor loans online. Although they may need to contact you by phone if they need more information. You will need to provide information about you income and outgoings. This helps the loan company can assess whether the unsecured loan is affordable. You may be asked to prove both of these things so having paperwork such as wage slips and utility bills to hand can be useful. Your guarantor will be asked to provide the same information so that the lender can check whether they will be able to afford the repayments if it becomes necessary for them to pay.
The application process can also be made via a broker. Some people find this a more convenient way to apply for a guarantor loan. The broker can search through a number of companies to compare personal loans and then be able to suggest the ones that would be more likely to accept you. If you do decide to use a broker then bear in mind that some of them will charge a fee that will payable when you make your application.
Final Stages and checks
A credit check will be carried out on both you and the guarantor. It is important to be honest with the lender about any money that you may owe elsewhere as this will show up on your credit report. It may also be a good idea for you to check your credit report yourself before the application is made. This will ensure that there are no mistakes on there which could affect the decision.
If you are successful in your application for guarantor loans, then the money could be paid into your bank account the same day. This will vary between lenders but when you are informed of the decision you should also be told when you can expect to receive your money.