Why Apply for a guarantor loan?
A guarantor loan can provide a crucial funding opportunity for those who have been refused by mainstream credit providers in the past. For many in such a predicament this can lead to risking our cars and our homes as collateral. When applying for a loan with a guarantor, you are essentially able to leverage the positive credit rating of someone you know and trust allowing you to attain the loan you need. Guarantor loans also allow your family and friends to support you when it is not financially viable to lend you money, by acting as your guarantor your loved ones are still able to help you in this instance. In addition, your credit score will continue to improve after every successful payment you make and this can subsequently help you to access more affordable finance and a wider range of offerings in the future.
What is a guarantor loan used for?
A guarantor loan can be beneficial for a variety of purposes which can include debt consolidation, covering bills, pursuing a business, buying a car or simply to finance a holiday. Loans with a guarantor are better for borrowing larger amount and are used for lifestyle purposes, compared to products like payday loans which are better suited for short-term emergencies.
How much can I borrow?
A guarantor loan will range between £500 and £25,000 depending on your individual status.
Essential criteria for the borrower
Essential criteria for the guarantor
Who can be my guarantor?
When considering who to choose as your guarantor be sure to select someone who you know well and feel completely comfortable sharing your financial status with. Typically, the most approved guarantors are parents, spouses, siblings, colleagues and close friends. To ensure a more successful application your chosen guarantor should have a good credit rating in addition to owning their own home, these two factors show companies that they are reliable in making repayments in a timely manner.
One other consideration to take into account is that your guarantor loan may cover 5 or more years. With this in mind, it will need to be someone who you will likely be in touch with after this time period. Usually, boyfriends and girlfriends are not the best fit due to the potentially unreliable nature of their continued presence and support.
How Can I Receive Funds?
When receiving your loan funds, it is usually as quick as 24-48 hours after initial approval. However, it is worth noting that the money will firstly sent to your guarantors account Funds can be sent within 24 to 48 hours of approval, but it is noted that the money may be sent to the guarantor’s bank account first as security measure and they have a two-week cooling period to send the money back to the lender if they wish to.
Can You Repay Early?
The nature of this request differs directly between lenders, however most firms offer a generous early repayment option.
Is My Guarantor Charged Automatically?
No, your guarantor will only charged or required to pay for your loan in instances as a final resort. Your lender will always be in touch first for the repayment and also allow a grace period before your contact is approached to cover this fee.
Can My Guarantor Exit or Be Changed for Another?
There is a two-week cooling period once the loan has been funded, but once this has passed and all the papers have been signed, the guarantor cannot suddenly leave the agreement or be swapped for another guarantor. This is because the loan terms are based heavily on the guarantor’s affordability, credit status and ability to repay. The guarantor can be released if the loan term ends or the loan is paid off in full.