Guarantor Loans
Guarantor loans – what are they?
It is basically a loan that is guaranteed by someone other than the recipient. For this reason, a person who takes out a guarantor loan may have a very poor credit history. A guarantor loan is a normal unsecured loan. If you cannot pay your loan, the responsibility will fall to the guarantor. This loan can be a great way for you to start improving your credit rating. You might be in a situation where it seems impossible to get a personal loan. This may well be your golden ticket out of bad credit, meaning that struggling to get a personal loan becomes a thing of the past.
Who is the guarantor for guarantor loans?
The guarantor will usually be someone who is very close to you, such as a good friend or family member. In the unfortunate event that you cannot pay the loan, the responsibility will fall to them.
Let’s look at an example to illustrate:
Michael has a very poor credit history. He has missed credit card payments and has rent arrears. He wants to borrow £2,000 but no one is willing to lend him money. Very few options are available. One of them is to get a guarantor loan.
The guarantor must be of a certain age and have a full-time job. Most importantly, they must have a very good credit history. This provides the loan company with the extra security that they require. Different companies may have different requirements, but they are generally quite similar.
Michael speaks to his brother Richard. Richard meets the above criteria. He agrees to be Michael’s guarantor for the £2,000 loan.
Michael has his guarantor loans approved. He is very happy, as he now has the £2,000 he has been trying so hard to get. It is essential that everyone involved is completely aware of the situation. Loan repayments are made by Michael, but if Michael defaults and can’t pay for whatever reason, Richard becomes responsible for paying the entire loan.
Who do I lend the money from?
There are a number of companies out there who offer guarantor loans. Many of these companies are online. Usually they don’t offer loans bigger than £5,000. Many of these online companies make their decisions very quickly (within a couple of days), so it won’t be long before you find out whether or not your guarantor loan has been approved. It is also essential to look at what the interest rate on your loan is. These can vary significantly between companies, so be sure to shop around to get the best deal. A company such as flmloans.co.uk has been tried and tested by hundreds of clients. You want to find a company where you have no hassle and decisions are made quickly so that you can get the loan that you have wanted for a long time.
Do you have bad credit history?
Unfortunately, many of us here in the UK have bad credit ratings. This has become a particularly significant problem over the last few years. The recent and on-going recession has put many of us in difficult financial situations. The problem with having a bad credit history is that it is easy to feel like you’re stuck in a rut and there are no options available to you. This is not the case; your options become more limited, but you can still lend money.
It may be a good idea to seek financial advice from a financial advisor or financial broker. Just make sure you are aware of their fees before meeting them. Some will offer you a free initial consultation.
Why get a guarantor loan?
As long as you are responsible and have the means to repay the loan, a guarantor loan can have a number of advantages. If you successfully pay off your guarantor loan yourself, you may never need to ask for someone’s help again! If you personally pay back your guarantor loan in full, you can really start to improve your bad credit history.
What other options are available?
Certain people with bad credit ratings may be eligible for an unsecured bad credit loan. Loanfinding companies may also be able to help you to improve your credit rating. Whether or not you are eligible will depend on your particular situation and the requirements of the loan company.