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The Basics of a Guarantor Loan

Guarantor loans offer an alternative form of borrowing to those with bad credit. If you have had problems borrowing in the past and these are reflected on your record, they can be just what you need to get fast cash as well as reestablish yourself. There are many companies which will lend if you have someone with better history of repayment who is willing to co-sign on your behalf.

How do guarantor loans work?

As you apply, you will supply the details of another individual who will guarantee that your loan will be paid, even if you default on your payments. This additional signature offers security to the lender that they will be reimbursed for the funds they pay out. Because it is more secure, you will receive a better deal than to get a payday loan, which is unsecured. Your guarantor will only be used as a source of payments as a last resort if refused or are unable to make your payments as agreed.

Who qualifies?

A guarantor is typically a family member or a close friend who trusts you and believes you will stay current with your payments. However, anyone could technically qualify to be a guarantor if they are willing to put their own financial worthiness on the line and sign on your behalf. Normally, friends and relatives are who will be your cosigner.

While a friend or family can co-sign, they cannot be financially linked or dependent on you, such as your spouse. Usually a guarantor will need to be over 21 years old and have a good score. They will need to be willing to undergo a check, provide identification, a proof of address and bank or other statements proving their identity.

Often they are for larger sums of money. If this is the case, usually your cosigner will need to own a home or other piece of property that is considered as collateral. If the lender requires collateral, your cosigner must have property that is valued high enough to cover their losses should you default.

Loans for people with bad credit.

It is typically assumed that if you need this type, you have a poor history of repaying your bills. You can typically get a better deal regarding interest, and far better APR interest rates, as well as loan a larger sum of money when you have a guarantor, as opposed to a payday loan. This type of lending is targeted to those with bad credit. If turned down by mainstream lenders, you still have hope with this type of borrowing.

We offer lending, similar to the following companies. If interested, please click the link above or compare our offerings to our competition.

CompanyDetails
Amigo
Amigo
Funds available within 24 hours
Home owner and tenant guarantors accepted
No repayment fee
TFS
TFS Loans
Everyone considered
Quick approval
Easy early repayment

UK Credit
Direct lenders, no upfront fee
Secure online application with fast payout
Loan from £1,000 to £10,000
Suco LoansAvailable to poor repayment history
Funds can be transferred same day

GuarantorMyLoan
Fixed rates for loan duration
No fees for early repayment
Possible cashback for guarantor

When someone supports you to borrow, it helps improve your credit because you can repay at a sustainable rate. It is easier to repay your loan. It enables you to borrow larger amounts in the future as your credit is restored. When this happens, you’ll receive better rates than you received before. While the rates you experience are lower than payday loans, they are still relatively expensive, with APRs of around 50%.

Rebuild your credit score!

Wouldn’t it be nice to borrow at even cheaper rates? You can ensure that when you borrow in the future, your rates will most likely decrease and fees will be lower because your score will improve. This is how people build their credit, especially when they have none to begin with. Everyone usually needs a deal like this as they begin to borrow. By repaying diligently, you increase your score and thereby make it easier to get conventional loans at lower interest rates.

Keep in mind that while repaying on time will build your credit, skipping payments will only make things worse. Do your absolute best to make timely repayments so your opportunities to borrow in the future remain strong. If unsure of what your score is, it could be worth your time to receive a report before applying for lending. If the report isn’t accurate, correct the factual errors before you attempt to borrow.

Things to be careful about.

  1. Maintain a good relationship with your guarantor.
  2. Make sure they understand the risks involved.
  3. If you default on your payments, your guarantor will be responsible to pay on your behalf.
  4. If they are unable to pay as well, they could lose their home.
  5. You can receive loans from £1000 to £7500. You may start smaller and work up to larger amounts after successful repayments.
  6. If you are struggling with your existing debt, you should not obtain even more debt.

Get matched with a direct lender today!

You will need to be over 18 and a UK resident with a valid UK address. You must also have a monthly income (from benefits or a job) and a UK bank account.

Warning: Late repayments can cause you serious money problems. For help, go to moneyadviceservice.org.uk