A guarantor loan could be an excellent option for borrowing money if you have bad credit, and these loans help many people in the UK with financial difficulties every year. There aren’t a whole lot of truly good options for borrowing money if you have a low credit rating, but this is definitely one of them. It is highly recommended that you take the time to learn as much as possible about these loans so that you can decide for yourself whether or not to apply for one.
What is a Guarantor Loan?
A guarantor loan is a loan that you can take out even with bad credit, as you have someone else the guarantor) who essentially co-signs the loan and agrees to take over payment if you cannot for whatever reason. This second person is completely responsible for paying back the loan if you fail to, and they must have good credit and adequate income. Finding the right person to act as a guarantor might be a bit of a challenge, but it’s well worth the effort. These loans are given out for amounts that range from £1,000 to £15,000.
Requirements of the Guarantor
Not just anyone will be able to act as the guarantor for the loan you need, as there are certain requirements they must satisfy before they are approved by the lender. The person who acts as your guarantor must have a good credit score and make enough money to be able to take over payments if necessary. Most lenders require that the guarantor be 21 year of age or older, and they also have to be a legal UK citizen. It is important that you take the time to find the right person to be your guarantor.
Who Can Benefit from a Guarantor Loan?
There are a lot of different people who can benefit from a guarantor loan, especially those with bad credit. If you have experienced problems with getting approved for a loan in the past because of your credit, a guarantor loan could be the exact solution you have been searching for. Only the credit of the person who will be co-signing your loan will really matter. This means that even people with bad credit have a good chance of getting approved as long as they have someone with good credit to co-sign. Those who need to borrow a substantial amount of money will also be able to benefit from getting one of these loans.
What to Consider Before Applying
There are a few key things that you should really consider before applying for a guarantor loan, such as whether or not you will be able to pay back the full amount of time. While it is true that the guarantor will be required to take over your payments if you cannot continue making them, you don’t want to come to that. Take some time to determine whether or not you will realistically be able to pay back the loan you take out promptly. The last thing you want is to put the friend or family member who acts as your guarantor into such a bad position because you can no longer make payments on your loan.
What Guarantors Need to Know
If you have been asked by someone you know to ask act the guarantor of their loan, there are going to be certain things that you will need to take into consideration before signing any documents. You will need to know what exactly your responsibilities will be if the primary borrower is unable to continue making payments on the loan. In this case the lender will turn to you to pay off the remainder of the loan. If you do not pay back the loan on the borrower’s behalf, you will be held legally responsible. It is important that you take some time to think about whether or not this is the right decision.
A guarantor loan can be incredibly beneficial for those who are in bad financial shape and need to borrow money but have bad credit. If you have been turned down by lenders before due to your credit, a guarantor loan could be one of the only options you have. You will of course need to find someone to act as your guarantor so you can get approved for the loan. When you take the time to really learn about these loans, you will be far more likely to apply for one.