If you have been refused credit for a loan in the past then it is probably because you have either a poor credit history (CCJ’s and missed payments etc) or you dont have any credit history to show the lender.
In these cases a guarantor loan could help you get the money you need. A guarantor is used to provide additonal security over the loan. In this event the guarantor acts as a co-signer on the loan and agrees to pay off the loan and meet the repayments if the borrower for whatever reason is unable to meet his or her loan obligations.
David Allan personal finance expert at Lendingexpert.co.uk says:
“Guarantor loans are a useful way of getting a loan at a reasonable rate. They allow the borrower to build up their credit rating and demonstrating to the lender that they are in control of their finances”: You can compare lenders and fees here at the website.
How much does a guarantor loan cost?
Guarantor loan rates start at around 45% APR and loans can be made for £500 – £15,000 depending on the lender and the loan application requirements. There are no set up fees and loan overpayments can be made without any penalties.
What are the repayment periods?
Guarantor loans are not like short term loans. They are to be repaid like a regular bank loan with most repayment terms being 1 – 5 years. The loans were designed to fill the void made by banks who were unwilling to borrow to anyone with a blemished credit score or missed payments CCJ’s etc.
Sarah Davies from Yourmoney.com says: “After the financial crash many people suffered from job loses and financial hardship which meant there were many good folks out there who couldn’t get a regular personal loan.
Guarantor loans started become very popular from 2010 onwards with the introduction of Amigo Loans being one of the first lenders offering this type of loan”: http://www.yourmoney.com/credit-cards-loans/a-quick-guide-to-guarantor-loans/
Who can be your guarantor?
Anyone can be your guarantor as long as they understand the role and is willing to help you. Both the main borrower and guarantor have to complete the loan application together.
Most guarantors are expected to be homeowners, however there are a range of lenders who also accept tenant guarantors and non homeowners. Your guarantor will need to be in full time employment and show proof of income, have a good credit score and clean credit record. They will also be required to meet the lenders requirements on minimum income.
Homeowner guarantors are preferred
It is worth noting that the best type of guarantor who be a homeowner as some lenders to have restrictions on tenant guarantors such as a lower lending limit and charging higher rates of interest to those who have tenant guarantors.
If you are looking for a guarantor loan then please speak to us as we can compare the market and find the perfect lender for you.