At The Lenders List we know that the terms used by guarantor lenders can become really confusing so we have designed an A to Z guide that will help you better understand what the guarantor lenders are talking about.
APR/Annual Percentage Rate
The Annual Percentage Rate usually shortened to APR is the amount of interest that is charged on your loan each year as a percentage. The APR takes in to account the amount of the loan from the beginning of the loan period to the end. With any credit products there are always charges to pay on top and the use of APR means that you can compare against other companies to see who offers the best rate in other words who will be the cheapest to pay back.
Cooling Off Period
Every lender must offer a cooling off period which is a legal requirement by a lender. This is a period where you may have a change of mind and decide that you don’t need the loan or this loan product is not for you and you can return the money and cancel any agreements. The cooling off period is usually up to 14 days but check with each guarantor lender directly to get the accurate number of days of the cooling period.
County Court Judgements (CCJ)
If there is ever a time that you can’t make or refuse to make payments and all resolutions have been exhausted there could be option for lenders to use legal routes to retrieve the money. A lender can possibly can take you to court and the outcome can be that you get a CCJ put against your name on your credit file and you will also be liable for all court costs adding to the amount you already owe. You will usually get about a month after the court date to pay any outstanding balances and avoid a CCJ being applied to you. If you get a CCJ against you what you will find is that you will have difficulty obtaining credit in the future and may struggle to get loans and mortgages as they will all do credit checks and a CCJ does reflect badly on any credit application so try to avoid your situation getting to this point.
Credit is a type of finance or product that you receive in advance and pay over a period of time this can be from a loan company, banks or even retails stores offering you products that you can pay for later. The guarantor loan you could get is known as getting or applying for credit which will be repaid over a set period.
The credit agreements is what’s used by a guarantor lender to give to customer to read and sign when you are happy with the terms and conditions of the loan. This document is legally binding so it is important to understand what is being signed and is important in receiving a loan from the lender as this will not be issued till they have a signed credit agreement. The credit agreement will usually include your personal details, amounts borrowed and the amounts needs to be repaid back and any implications of breaking the agreement. Once the agreement is received by the lender they will store this away and it is always good to keep a copy for yourself to avoid confusion in the future.
Credit scoring is a measurement used by finance companies to see whether they can approve you for credit or not. When your applying for a loan this involves taking your personal information such as name, address and then some information about your job and details about financial commitments you already have and details about past financial history. Once all these details are received this is compared to your credit file and this gives finance companies an idea of what the risk is if they lend to you for the amount you wish to borrow. If your credit scores reaches a level that the lender is happy with they will approve your credit, if it does not they may offer you less than the amount you request or decline your application altogether if they believe your too much of a risk. Guarantor lenders will use credit scores on your guarantor and yourself but they will always work on applications manually on an individual basis rather than a computer telling them on who can they can to or not.
A credit search is a search used by lenders to identify a customer by using their name and address and will use credit agencies to get access to your credit file. Any credit searches done against you will always be put on your credit file this will notify companies that other companies have requested information for you also. Guarantor lenders will conduct a credit search on your guarantor so they can be identified against the application submitted. Credit agencies do not impact on the outcome of an application they will just give the lender details of what has been requested.
Direct Debit/Direct Debit Mandate
Direct Debit is a method of payment used by guarantor lenders to collect payments on a weekly or monthly basis from your bank account. Whilst processing your loan the guarantor lender will send you a mandate to fill out and signed that you agree to the payments coming out of your account usually on specific day and will run until the guarantor loan has be fully paid.
E-Signatures & Online Applications
The guarantor lenders are always looking for ways where they can use innovative technology to make the application simple and quick. Borrowers can fill in applications all online without the need to fill out paperwork, this speeds up the process leading to quicker decisions. If your application has passed and cleared checks the guarantor lender will send an electronic document for you and your guarantor to sign you don’t even need to print out in most cases as there is a box where you type your name and this will be legally binding.
Financial Ombudsman Service
The Financial Ombudsman Service is a free service provided by the Government and set up by the financial regulator, the Financial Services Authority (FSA). If you have a complaint against a lender that can not be resolved with the lender directly and everything possible has been done to make the situation better then you can lodge a complaints with Financial Ombudsman Service who will look at the case impartially and fairly and will advise both parties of the outcome of their findings.
A formal reminder is usually an email or letter sent to you when you have missed a repayment. The letter will state how much is owed and any charges incurred during this time and that payment should be made as soon as possible to avoid further charges.
A guarantor is a person you nominate to guarantee payments of a loan if you are unable to pay. The guarantor that you get for your application can be friends, famaily or even a close work colleague and they will need to be in full time employment with a regular income and have a good credit file. With some lenders the guarantor must own a home but it does vary from lender to lender.
A guarantor loan is an unsecured loan of up to £12,000 for which you DO NOT need to be credit scored. Someone who knows you well (e.g. parent, relation or close personal friend) agrees to act as the loan’s guarantor. Because the guarantor backs your application the lender doesn’t need to credit check you. And since they don’t use any computerised credit scoring techniques they can say “Yes” where ordinary banks and building societies can’t. Your credit history is irrelevant! These loans are also sometimes called Guarantor Loans. Apply now.
Late Payment Charge
If you miss repayments the lender may send you a formal reminder letter of a charge being applied to your account as per your agreement for missing a payment.
A late payment is when your loan has not been repaid on time or missed. You could be sent a letter about the late payment and may incur further charges. If you have issues with making payments please contact the lender in the first instance because if you have a plausible reason for the late payment they may deduct this because of your situation. If you don’t have a good reason then you will be liable charges and will affect your credit score negatively.
The loan agreement is a contract between you and the guarantor loan lender which will mention the terms and conditions of your guarantor loan. The agreement will include loan amounts, how much that needs to be repaid and the repayments period. This agreement is legally binding once you have signed it and sent it back as you have agreed to the terms. Always keep a copy for your own reference.
A loan application is a form you fill out with a guarantor loan lender on their website. The loan application consists filling in your personal and financial details and your guarantor will need to submit details also. Once the loan application is completed just submit so that the guarantor lender can take a look and evaluate your application to give you a decision.
Loan Term/Loan Period
The loan term or period is the amount of time that you have agreed to repay your guarantor loan if you wish to pay your loan earlier than agreed you can do so without the risk of any fees.
Once a loan amount has been agreed with the guarantor lender you will have to make monthly repayments. Paying back in monthly repayments means you don’t have to pay back the loan all in one go. The monthly payments are much more manageable and lenders will factor in a number of things so that it will not effect your living costs as part of the responsible lending policy which guarantor lenders must follow.
Overpayments can be made on your loan, this is where you pay more than your agreed monthly repayment schedule. Most lenders are happy for these payments to be made and can be made at any time, overpayment will reduce your overall cost as you are paying off your loan earlier
Pre Contract Information
Pre contract is similar to the credit agreement and will state the loan amount, how much needs to be paid and for what durations. This document will also contain the terms and condition set out by the guarantor lender and once your happy you will need to sign and return back.
Once you receive a guarantor loan you will need to make payments each month until the loan is finished. The repayments will be clear from the outset and would be indicated on your credit agreement of what needs to repaid each month and for how long.
A secured loan is a loan that has a security of an asset in place such and for example can be made against your property. These kinds of loans can be ideal for those with a less than perfect credit rating and will often give you the ability to borrow a larger sum of money. The pitfall in this is that if you take a secured loan on your house, and you fail to make the repayments the value of the loan will be collected against your house and if may face the possibility of losing your house. A guarantor loan is an unsecured loan as no assets are kept as security from the lender. The repayment period of the loan may be longer than a unsecured loan but usually these payments are easier to manage.
A Tenant loan is another type of an Unsecured Loan. These types of loans are primarily aimed at borrowers who do not own any property and are not able to get a secured loan. Tenant loans are a great way for borrowers who rent their property or live with parents to apply for a loan. Our list of lenders often cater for tenants and may be able to provide you with the credit you require
Total Amount Payable
Your total amount repayable is a calculation of your loan amount and the length of time that you will have this loan for. this will also form a part of your loan agreement. This will include the orginal amount of credit that you have borrowed and a break down of the amount that will be paid extra on top of the credit amount which is based on the APR. This information will be sent to yourself on your Pre-Contract and on your Credit Agreement
When your loan is unsecured it enables you to borrow money without offering up a security based asset, like your home for example. For this main reason the APR’s with these types of lenders tend to slightly higher than other loans