These days most persons have applied for a loan at least once in their life, and loans remain one of the most popular options for people who need money quickly. Nevertheless, the economy has been very unstable and many borrowers found themselves unable to pay back their debt on time.
Ultimately this affected their credit and they became unable to get another loan because they were not able to meet the lenders’ requirements. Luckily for them, another solution became available.
Guarantor loans are a type of loan that is accessible even to people who have a bad credit. These loans require another person that is able to guarantee for the borrower. This will offer the security the lender needs and the third person’s “reputation” will be the one that makes the loan possible.
This means that the guarantor must have a good crbeingit, as well as be a homeowner. The income of the guarantor is also taken into account, because he or she must also be able to afford making the payments if the borrower is not able to.
However, guarantor loans come with plenty of risks for the guarantor. That persons offers the lender the equity in their own property. This means that if the borrowers fails to pay the money back in time, the guarantor might lose some important assets, even their own home.
Check the interest rates
Before you apply for a guarantor loan it is very important to know what the interest rates are. They will differ from lender to lender. While some will offer variable rates that change a bit, others will offer fixed ones. Usually, fixed ones are safer as they will not change during the life of the loan.
If are planning to get a guarantor loan you should also find the lowest interest rates. Compare all the offers and pick the one that is best for you. A broker might help you with this process.
How to get a guarantor loan?
Applying for a guarantor loan should not be too complicated and you should be able to do it online. Most lenders have a website where you should be able to make an application. In the application you must send all the required data, as well as documents that support it.
You should receive an answer from your lenders after they will have analyzed your application. You can either get an email, a text or a phone call.
Paying back the loan
You can choose to set up a direct debit which means that the money you need to pay will be deducted from your bank account. There should also be an option for you to settle the loan early, but in some cases there might be a fee if you want to do that.
If you have problems with money and do not think that you can make the repayments it is vital that you call your lender and let them know. You should also talk with your guarantor.