If you have made some mistakes with your finances but need to get a loan, there are still options available that you will need to look into before calling it quits. A guarantor loan is a popular and convenient way to get the money you need without having to worry about your credit being a problem. A lot of lenders who give out these loans will approve applicants that don’t have great credit, so it’s an option you will need to learn more about before moving on.
Choosing a Guarantor
The guarantor is essentially the person who will sign onto your loan accepting responsibility for paying off the loan in full if you are not able to due to illness, unemployment or other unforeseen circumstances. This person must have a solid credit rating, stable employment and adequate income. Keep in mind that the lender is going to take a long hard look at the person you want to be your guarantor, so it’s important to find someone with the necessary qualifications. You must also completely trust this person, as they could end up needing to take over the loan payments for you at some point.
Cute Any Financial Ties with the Guarantor
The lender will not care if you are related to the guarantor in any way, but you shouldn’t have any financial ties with this person. This means that you shouldn’t share a joint bank account or anything else that could be a problem when applying. Eliminating these conflicts will increase your chances of getting approved by quite a bit.
Establish an Agreement
You should reach a clear and concise agreement with your guarantor which states that they will pay off the remainder of your loan if you cannot. It is important that this person is completely clear on all of their responsibilities so there is no confusion. You will also want to have the guarantor read the loan contract in full before they sign, and you should do the same. The contract that you enter into with the lender is going to be legally binding, so you will have to take it seriously. Go through the document with a fine tooth comb and read every single detail until both you and the guarantor are satisfied with the terms of the loan.
Search for a Lender You Can Trust
Many lenders give out guarantor loans, but that doesn’t mean you should choose the first one you come across. You will need to make a point of looking for a lender that will give you a good deal in terms of your interest rate. Set aside some time to do this research so you don’t end up getting ripped off. The internet is by far the best resource for doing this research, so you will need to spend some time using it to your advantage.
Take the time to find out which credentials each lender has and if they have any negative reviews from previous customers. You can learn a lot about a lender by looking at websites that have these reviews, so you will need to spend some time doing that. Look for a lender that is also flexible and will be willing to work with you if you start struggling to make your monthly payments. While it’s true that your guarantor can take over the loan payments, you will want to avoid this situation if possible.
Decide How Much to Borrow
You will need to sit down and figure out exactly how much money you need to borrow, because you won’t want to take out any more than this. One of the biggest mistakes that a person can make when getting a loan is to take out more than they can afford to pay back, and as a result they usually default. If you want to keep your credit intact and improve it, you must pay your loan back on time. Look at the state of your finances so you will know exactly what you can afford to pay every month before moving on in this process.
Benefits of Guarantor Loans
There are many different reasons to get a guarantor loan, including:
• Credit isn’t a problem: The lender won’t care very much what your credit score is like, but the guarantor’s will matter. Lots of people in the UK end up turning to these loans for financial assistance because their credit score is so low.
• Fast access to funds: You can generally get the money you need very quickly with a guarantor loan if you are approved. It won’t take more than one or two business days to get the funds you need.
• Apply online: It is possible to apply online for a guarantor loan, so you won’t even need to leave your home. The application process is very quick online when compared to filling out actual paper loans at a bank. It is also very simple and straightforward, so you will know exactly what to do step by step.
• Reputable lenders: There are plenty of reputable lenders who give out guarantor loans, but you will still need to do your research. It is a common myth that all private lenders are shady scam artists. In fact, a lot of these lenders are actually quite friendly and flexible with qualifying individuals.
Who Should get a Guarantor Loan?
Guarantor loans are well-suited to many different people, especially those with bad credit. If your credit score is extremely low and you’ve been turned down for loans by banks before, this could be a great option to look into. Only responsible people should get one of these loans, as it needs to be paid back on time. Take all the time you need to find the right person to act as your guarantor so you can be sure that they will come through for you if the need ever arises. These loans can be very helpful to a lot of people, and you’ll be glad you decided to apply for one.