For those with a poor credit record, securing a loan can often be an exercise in frustration. Despite there being thousands of banks, high street, and online lenders to choose from, very few are willing to take on those that they perceive as high risk.
It’s not only those with a poor credit record that struggle to meet their stringent criteria. Young people who haven’t had the chance to build a credit history, students, and those who are self-employed are all viewed with equal distrust, and this causes serious problems for those who are short on funds and need to borrow.
Luckily, there are lenders out there who are willing to view the unconventional and the downtrodden in a different light. Some create packages specifically tailored to the needs of these societal rebels; others use different criteria to assess the risks they pose.
Those offering guarantor loans fall into the latter category. If you’re looking to borrow, here’s everything that you need to know about them…
What Is a Guarantor Loan?
A guarantor loan is a type of unsecured loan, which means that no security is required before funds are released to the borrower. Instead, the level of risk is balanced by a second person, who offers to act as guarantor for the loan applicant. Should the applicant fail to meet their repayments, the onus falls on the guarantor in their stead. For more information on Guarantor Loans, check out www.trusttwo.co.uk.
Is a Guarantor Loan Right For You?
Guarantor loans are most commonly used by those with a poor credit history, or those who are disqualified from more traditional borrowing on grounds such as their age or occupation. If you have struggled to obtain credit in the past, then a guarantor loan might well be the perfect choice for you.
Who Should Be Your Guarantor?
The choice of who to use as a guarantor is entirely down to you, although there are some criteria that they must meet, foremost amongst them a good credit score. Generally, you’ll need to trust them, and they’ll need to trust you to meet your repayments in return, as well as being willing to shoulder the burden should you find yourself unable. For this reason, most people choose either a good friend or family member, although spouses and partners are excluded.
What Will Your Guarantor Need to Do?
The role of a guarantor is simple. Provided that you meet your repayments, they will need to do nothing more than vouch for your reliability. However, should you default, they will find themselves charged with your loan in lieu of you, and must accept liability for making contractual payments on your behalf.
Could a guarantor loan be the right borrowing option for you?