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Guarantor Loans Are Available if You Can Find Someone Who Trusts You
What are Guarantor Loans?
Even if your credit rating is completely shot there are still some loan options which can be made available to you. Guarantor Loans are available to people with bad credit. In order to obtain a guarantor loan it is necessary to find someone who will guarantee that you will pay your loan back on time. This ‘guarantor’ is usually a friend or family member but can be anyone providing they fit the lender’s credentials.
Who is the Guarantor?
It is usually necessary for a guarantor to be an employed homeowner with a regular income and an excellent credit history. The guarantor is likely to have to sign an indemnity which is basically a contract in which he or she agrees to pay your debt in the case that you default.
Know what you are getting into with a guarantor loan
If you decide to take out a guarantor loan and you can find a guarantor to support you then it is important ensure that both you and your guarantor know exactly what you are getting into. Guarantors are usually close friends or family members so it is really important to pay the money back. As the borrower trust is being placed on you to honour and agreement and failing to make payments is likely to put a great strain on your relationship with your guarantor.
How much can you borrow with a guarantor loan?
How much you are able to borrow will depend on the lender but most guarantor loans can provide between £500 and £7,500. However, you should keep your borrowing to a minimum or the interest on your guarantor loan debt is likely to get very expensive.
When should guarantor loans be paid back?
With most Guarantor loans the sooner you pay back the debt the less interest you will have to pay back. However this is not always the case. If you are trying to get a guarantor loan make sure you compare different loan companies to try and find the loan which suits you and your guarantor best. Guarantor loan companies differ on what they offer so do shop around.
Be sure to thoroughly read the terms and conditions of any company you are interested in so that you really understand the loan properly.
What are the risks associated with guarantor loans?
With the growing number of individuals taking out guarantor loans it has never been more important to understand the risks associated with guarantor loans. Guarantor loans are personal loans which allow the borrower to nominate a guarantor. The guarantor must step in if you suddenly find yourself having problems making your repayments. The guarantor will take on the responsibility if you default on your payments and could end up losing their home or assets should you fail to make the repayments. Always seek independent financial advice should you be in any doubt.
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A Guarantor loan is when a loan agreement involves a third party who guarantees the loan. A lot of the time guarantor loans are made when an individual has a bad credit history. When you have a bad credit rating often financial institutions might deny you a loan as you are too much of a risk for the lender.
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