A Quick Start Guide To: Guarantor Loans

Guarantor loans have actually been around for a fair while however it isn’t until recently that more companies have started offering these type of loans. In short a guarantor loan is an unsecured loan that is backed by an external party who agrees to repay the loan if for any reason the borrowed cannot make the repayments.

Why Would I Want This Loan?

The main reason why someone might chose this type of loan over more conventional ones is that no matter how bad your credit rating looks you can use a willing friend/family member with a better credit rating to essentially¬†guarantee¬†that you will meet your repayment schedule and there won’t be any hick ups along the way.

How Much Can I Borrow?

Most companies allow you to borrow up to as much as ¬£7500 however this will vary from lender to lender so make sure you check the limits before you proceed with a loan. It is also worth mapping out a financial plan and think about exactly how much money you need to borrow, it will be quite a sensitive subject and requires a lot of thought as essentially it’s not only the lender you could get in trouble with but also your family or friend that has agreed to back the loan.

Who Can Be My Guarantor?

Basically anyone can be your guarantor however it is recommended that you choose someone you can trust, usually a family member or close friend. The actual requirements state that the guarantor must be 21 or over, have a good credit rating and be a UK homeowner.

What Are The Requirements To Get Accepted?

Although the loan is backed by a third party there are still a few requirements that you must have in order to get accepted for a guarantor loan:

  • 18 Years old or over
  • UK Resident
  • Hold a UK bank account

Although no in depth credit checks will be done on the applicant the lender still has to lend responsibly so you need to prove in some detail that you have the means to pay back the loan as falling back on the guarantor to make the payments is a scenario that shouldn’t ever really happen.
 

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