If you happen to have poor credit, you will most likely have limited options for finance and credit. Fortunately, it isn’t always necessary to resort to overdrafts or payday loans when you need assistance. There are also guarantor loans available, which are a kind of fixed-term loan used by people who have problems with their credit history and have bad credit ratings.
This type of unsecured loan can vary in duration and amount to provide you with great flexibility when searching for the solution that can help you the most with your specific situation.
For your guarantor loan application to be successful, you must have a valid UK bank account and be over eighteen years old. In the future, you will be used for paying the money back that you owe on the guarantor loan.
You also need to ensure that you have access to a well-suited guarantor for supporting your loan request.
How To Find The Right Guarantor
Not everyone qualifies to be a guarantor on loan. To support a loan for someone, you must be over 21 years old and also need to have a fairly good credit history. Usually, you will need to have a UK bank account of your own, and at times will need to own a home in the UK as well, although there can be other options available for prospective guarantors who are not homeowners.
When you have a home that can be linked to another person’s guarantor loan, they will be able to borrow a higher amount of money. However, you must understand that your property is being used to secure the guarantor loan.
That means that if the individual who applies for the loan and the guarantor cannot make repayments on the loan on time, the guarantor can be at risk of losing their home to repay the loan.
Is A Guarantor Loan Something You Should Get?
Guarantor loans are not the best option for everybody, but they can be a good solution for individuals who desperately need financing or who might be missing out on the chance to have access to money that they need due to problems with their creditor.
The following are some of the most important benefits that guarantor loans offer:
1. They Are Available To Individuals Who Have Bad Credit
For individuals with poor credit history, guarantor loans are ideal, according to guarantor.co.uk. They frequently are easy to access, as long as you have a guarantor with a good credit score. There are some situations where a credit check won’t even be necessary when applying for a guarantor loan. The guarantor, however, will be subject to having their credit checked.
2. Greater Flexibility
Borrowing money with a guarantor loan has fewer limitations associated with it. That is because a guarantor gives additional security with good credit to the building society or bank that might otherwise not be inclined to lend money to certain borrowers.
Often, you can borrow whatever amount of money you feel comfortable that you can repay and for whatever length of time that best suits you. Guarantor loans, unlike a payday loan, in most cases allow for much longer repayment periods.
3. Simple and Quick Process
Guarantor loans are frequently easy and fast to access. After the application is complete and a guarantor is available, the process often takes less than one day. Guarantor loans also provide additional security and safety for individuals in hard financial positions since they know there is someone to help them take care of the debt if there are any problems.
4. Provide Your Credit Score With A Boost
In certain situations, a guarantor loan can provide people with poor credit histories with a great opportunity to get their credit score improved through associating with a guarantor who has a good credit score already. If your monthly repayments are met, the credit reporting agencies get a report on this performance, resulting in your credit score increase.
Guarantor loans can ultimately be beneficial for individuals who need funding but who have bad credit histories. However, before applying for this type of loan, you should carefully think about your past and future financial interests to ensure that you have the ability to repay your loan on time.
It is also essential to talk with your guarantor about repayment so that you both know precisely what is involved and what you are getting yourselves into.
You should make sure that you don’t ever borrow more money than you really can afford to repay, whether or not you use a guarantor.