All You Need To Know About Guarantor Loans

03 August 2012 16:00 - Phoebe Robinson

    



All You Need To Know About Guarantor Loans

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. However if a guarantor is willing to take the responsibility of repaying the loan in the event that the borrower default then often the lender will agree to grant a loan. Normally, guarantor loans involve written agreements that are signed by not only the borrower but also the guarantor.

There are quite a few guarantor loans that people can obtain. As the word guarantor loan only applies to the fact a third party guarantees repayment, the term is suited for any type of loan. For example a guarantor may help a person get a student loan or a mortgage. These loans can be made for personal reasons or for the purpose of debt consolidation as well.
There are no restrictions as to who can be the guarantor of a loan. A lot of the time family members and friends often help their loved ones like this. Obviously the requirement for a person who would like to be a guarantor is they should have a good credit rating and a means of repaying the loan in the event that the borrower has to default. Normally the lender considers a guarantors income and assets in deciding whether or not to grant the loan. 

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