Guarantor loans are a way of obtaining credit if you have a bad credit history and are unable to get a loan based on your own individual circumstances. Guarantor loans are designed in a way that you would ask a friend or family member to support your application and is very different to payday loans or instalment lenders. The person you ask to support your application known as the guarantor will have to have a sound credit history as this will be checked and some guarantor loans lenders will require this person to be a homeowner but it is not always the case as this will vary from lender to lender.
Why You Need A Guarantor?
The reason that you need a guarantor to support your application is because when they sign an agreement they are agreeing to pay any monthly cost or outstanding balances owed if you miss payments or can’t afford to pay so it is vitally important that your keep up with your payments, are trust worthy and honest when taking out this type of loan as failure to meet monthly payments could mean your guarantor will be paying back your loan.
Interest Rates On Guarantor Loans
Guarantor loans usually have a lower rate of interest compared to payday and instalment loans and can be paid back over a longer period. Typically guarantor loan amounts can be between £400 to £10,000 and can be borrowed for 6 month to 5 years and there could be benefits with various lenders for paying back early.