Whether you need access to funding for emergency car repairs or much need home improvements, there are many different financial options available on the market. From secured loans that are ideal for property owners who want to borrow large sums of cash to asking for help from your family and friends, the most effective method will normally come down to your personal circumstances and financial situation.
Guarantor loans are also a possibility and offer a range of different advantages, especially for the many people out there that might feel like that nowhere else to go to secure extra finances. So, if you are new to world of guarantor loans or completely unsure who can be a guarantor, then keep on reading to learn more about the advantages of this financial option.
You Can Borrow Large Amounts of Cash
Due to having a guarantor as a safety net should you not be able to make the repayments; these type of loans allow you to borrow much larger sums of cash. If your guarantor owns their property then you will be able to borrow more money than if they are a tenant. This makes guarantor loans a better road to go down if you are looking for funding for a much more expensive purchase.
It’s a Quick Approval Turn Around
The process of applying and securing a guarantor loan is extremely quick when compared to other types of loan applications. Most guarantor loan applications are processed, and the funds deposited in the borrowers account within a 24-hour time frame. So, if you have found somebody who is willing to be your guarantor and need quick access to finance, this offers a great way to obtain a loan quickly, if you don’t meet strict lending criteria.
They Are Easily Accessible
Guarantor loans are primarily designed for those people that have bad credit and are struggling to borrow money from other lenders or sources. As long as you can find somebody over 25 years old that has a good credit rating to act as your guarantor, and you are not bankrupt yourself, then applying for this type of loan is an option for anyone to consider.
You Can Borrow on Longer Terms
The repayment terms on guarantor loans will typically depend on the amount of money that you borrow and how much you can afford the payback over the borrowing term. Guarantor loans are actually a very flexible option with some terms lasting up to 8 years as opposed to payday loans which recently received a wave of bad press.
They Can Improve Your Poor Credit Rating
Effectively managing a guarantor loan can be one of the best ways of improving your poor credit rating. Most lenders that offer guarantor loans will offer borrowers the option to pay back their loan early or even make overpayments without incurring additional charges. If you do take out a guarantor loan and have the option to this then we highly recommend that you do so as it is another great way of improving your poor credit rating.
What If I Want to Be A Guarantor?
Signing up to be somebody else’s guarantor is a big financial commitment to make so before rushing into anything or signing any paperwork it is absolutely critical to do the following –
- Assess whether you can actually afford to be a guarantor and if the borrower can afford to take out the loan.
- Consider the type of relationship you have with the borrower and if the relationship would be at risk if the borrower defaulted on the repayments.
- Make sure that you are going to be able to cover the loan’s monthly repayments without any other financial assistance.
- Seek professional financial and legal advice to ensure that you fully understand the mechanism of guarantor loans and how they could possibly have an impact on your own financial circumstances.
- The timeframe that is needed to fully paid pay off the guarantor loan.
- Find out why the borrower wants to take out a guarantor loan, and how much they want to borrow. If the sums don’t add up then you must reconsider being a guarantor.
- The interest rate of the loans and what the other fees and additional costs are.
- If you have been asked to be a guarantor on a loan for a business, then you must find out as much information you can about the business including its current financial status and financial goals for the short and long term future.