Get a loan even if you’ve got bad credit by designating a guarantorPublished: June 14, 2019
If you’ve been turned down by lenders for a personal loan or consolidation loan and have ‘bad credit’, a guarantor loan may well be an option worth considering.
So, what exactly is a guarantor loan?
A guarantor loan is a loan that someone else (such as a member of your family or a friend) agrees to repay if you become unable to afford the repayments.
At Loan.co.uk we can help you secure a guarantor loan for £500 right up to £10,000 and you can choose to repay it over a time period that makes it affordable. What’s more, unlike with a secured loan, a guarantor loan isn’t secured against your property.
What should I (and my guarantor) be aware of with a guarantor loan?
It’s important to note that because the loan repayments are guaranteed by someone else alongside you, both you and your guarantor (friend or family member) will be responsible for paying the outstanding amount if you become unable to do so.
So, if you became unable to repay the loan, your guarantor will be expected to step in and make the repayments for you. After all, that’s why this type of loan is called a guarantor loan. Obviously, having to repay your loan for you could test your relationship somewhat.
Your guarantor will also need to know that they will need to go through the same checks as you, as the lender will need to know that the loan will be affordable for both of you.
Because a guarantor loan carries a fairly high level of risk to the lender, the rates for this type of loan can be significant, so make sure that you’re both aware of the cost of the debt and the interest rate that will apply.
Check your credit rating
Before taking one out, be sure to check your credit score in case it’s actually not as bad as you thought. If this is the case, you may be able to take out a personal loaninstead. It may also be worth checking your credit history in case it has errors in it that are preventing you from getting a loan without the help of a guarantor.
Who would make a good potential guarantor for your loan?
Usually, this will be someone that trusts you and understands your circumstances. It could be a close member of your family, a good friend or even one of your work colleagues. Whoever you choose to be your guarantor, they need to want to help you get your loan.
The guarantor usually needs to be at least 21 years old, have a good credit score and history and usually will need to be a homeowner, although a guarantor loan is not a secured loan and some lenders don’t require it now.
If you’re thinking of taking out a guarantor loan, you’ll need to discuss your application with your guarantor, so try to choose someone that you’ll be comfortable with sharing details of your finances and circumstances. You’ll also need to make sure that they fully understand what this type of loan is and what it entails.
If a guarantor loan sounds like a sensible option given your particular current situation and circumstances, see how Loan.co.uk could help you.