Guarantor Loans are very popular as they allow you to apply for an unsecured loan even with a poor credit history, providing a family member or close friend guarantees your loan repayments. Having a guarantor puts much less reliance on your credit score and in the case of bad credit, a guarantor loan is often found to be much more flexible and cheaper than other types of bad credit borrowing.
What is a Guarantor?
Guarantor loans have been around for a very long time and utility companies have been using this method for ages. Basically, a guarantor is prepared to back the applicant of a loan by guaranteeing to repay the loan should the person default on repayments. A guarantor can be a family member or a close friend who is willing to trust your ability to repay the amount borrowed enough to stand surety for your unsecured loan. Having a guarantor will lessen the impact on your credit score. Being a guarantor is something not everyone is prepared to do, but if you are able to find someone who is willing to guarantee your loan, you should be able to get one.
A guarantor loan is sometimes mistakenly called a Guaranteed Loan. Loans are never guaranteed as the lending always includes an affordability check which is an assessment of the applicant’s ability to repay the loan. You do not need your guarantor’s details when you apply as lenders can accept your application in principle, however, this information will be required in order to complete the loan.
In some cases it is possible to receive your loan on the same day, however, this depends on several factors that can speed up or delay approval. Here are some things you can do to maximise your chances of a speedy pay-out.
– Find a guarantor willing to back the loan;
– Make sure that your guarantor understands the procedure and is fully aware of his/her obligations as a guarantor.
– Ensure that your guarantor fulfills the criteria required by typical lenders;
– Make all income and expenditure information available to the lender;
– Provide all requested documents promptly;
– Answer all questions from the lender truthfully and promptly.
Unsecured loans are not secured by assets such as a home, car, or jewelry. You can be a homeowner or tenant and your guarantor does not have to be a homeowner. You can apply for short or long term loans with periods of repayment ranging from 1-5 years. As soon as your guarantor has been accepted by the lender, you will have access to the loan amount.
If you are considering consolidating existing borrowing be aware that the terms of the debt may be extended and the total repayment amount may increase. Missing payments will result in severe consequences that will make it more difficult to obtain loans in future.