Guarantor loans are great for those who have a less than perfect financial history, often getting credit can be a frustrating experience. The limited choice for those with a shaky credit past can leave you picking either a very expensive loan product or being turned down completely. This is where a guarantor loan could come in handy – guarantor loans are designed for those who may have been turned down by mainstream lenders or their bank. A guarantor acts as a backer who agrees to pay any loan instalments which are not paid, loans vary in size and are usually at a much reasonable rate than those offered by short-term, high interest loan providers.
Why do I need a guarantor for my loan?
With guarantor loans you can borrow larger sums of money at a more reasonable rates, but in order for these companies to lend you credit they require a guarantor. The guarantor is someone who will vouch for the borrower, but also agrees to pay any part of the loans which foes unpaid. With this extra layer of security for the loan provider they are able to offer much lower rates compared to other bad credit borrowing options.
Who should I ask?
A guarantor can be anyone you know, the requirement for the guarantor varies between companies, some will accept guarantors who are home owner others will accept tenants, but all need to have a good credit history and meet the maximum age requirement, this information can be found on our individual review pages.
Your guarantor could include family or friends but in most common cases borrowers tend to get one of their parents to act as a guarantor for their loan. Whoever you decide to be your guarantor they will need to sign a contract and it’s important they they understand the full terms of the loan and they understand they will be responsible for covering any payments in the event that you are unable to.
Does my guarantor need to do anything?
An application form of will have to be completed this is usually completed online but could in other formats such as a phone call, usually the information collected by the lenders is to complete identity checks, credit check and affordability checks.