Quite often, when you suffer from issues related to bad credit, managing the financial expenses gets a bit complicated.
Handling the chaos is not possible, without any external support. Of course, you will require some amount of assistance and apart from applying for loans, there is no other option. The situation is dicey and accordingly, you have to look for an alternative that fits into your budget. However, the traditional lenders may not be of any help, considering your poor credit history. In a bid to derive the funds required in these circumstances, you may try out the option of guarantor loans.
These loans to a large extent let you acquire the funds, which you can put to use to deal with the various expenses. The loans, in particular, are ideal for those who are having issues related to bad credit; self-employed as well those who are without any stable income source.
Features of a guarantor loan
A guarantor loan is the perfect solution for those with bad credit history or who have a poor credit score. It is unsecured credits, meaning there is neither security nor property involvement when making the loan application.
The interest rate is lower than other bad credit loans such as payday loans. Banks and other lending institutions offer this type of loan so long as the borrower has a guarantor who will co-sign the agreement.
Applicants for a guarantor loan must be of legal age in the UK (18 or over). Banks and lending companies will also look at the borrower’s financial capacity to ensure that repayments can be made in a timely manner.
Applying for this is a great way to re-establish your credit rating assuming you are able to prove that you can pay the full amount promptly. However, if payments were not made on time, the guarantor will be expected to make any outstanding repayments.
Getting a guarantor loan
Judging by the circumstances, you have to avail the loans by keeping in mind certain factors. The loans are being offered to you in lieu of the guarantor that you are providing. In case you default or fail to make the payments, then your guarantor is liable to make the repayments. The guarantor is someone who has a perfect understanding of the circumstances and it is a must for them to consent to the terms, pertaining to the loans.
Other than these, the person who is backing you up as a guarantor should have a perfect credit score and should have the resources to continue making the paying the payments, if for any reason you encounter financial issues.
What steps must you take before applying for the loans?
In your situation, it is usually complicated to arrange a guarantor. Since your credit score is not really up to the mark, you have to ask someone from your family or friends to stand as a guarantor. In the first place, you may discuss the situation and provide all the information, without hiding anything. It is of utmost importance to earn the trust and proceed accordingly. The person is coming to your rescue in a difficult period and you must ensure to keep the faith intact.
How can the loan be helpful?
By applying for the loans that involve a guarantor, you are in a position to derive the funds with consummate ease, despite having a bad credit. Because your guarantor is in possession of a good credit score, the chances of attaining the funds with competitive terms are very high. Moreover, when you do ensure to pay back the amount borrowed within the stipulated time, you then get an opportunity to improve the credit score. This way, you are all set to stabilize the financial condition without having to face too many obstacles.
Products where guarantor loans can be used
This can be particularly useful when immediate financial needs arise. Because they are personal credits, as well as using them for personal financial needs, you can use the balance it to acquire a new car or even pay for school fees.
Since guarantor loans (a.k.a. buddy loans) are designed to help those with poor credit scores, the presence it will help you get the loan.
The credibility of the credit history of your guarantor is also a critical factor in getting the loan approved. When applying for a new loan, it is the assessor’s responsibility to examine the capacity of the guarantor to pay just in case the borrower can’t repay the loan.
Who is eligible for a guarantor loan?
Anyone that is of legal age, at least 18 years old is eligible to take advantage of the loan.
Who can act as guarantor for the loan?
It can be anyone you know who is willing to sign the agreement with you.
They also have to be at least 18 years old, and should not be linked financially with you (such as a spouse). Lending institutions will require them to show bank statements and other proof of financial capability to stand as guarantor for the loan applied for. Furthermore, they must have a valid ID for verification purposes.
Guarantor loans have the potential to improve the quality of your life. As a matter of fact, the loans do facilitate cash approval, at a time, when you are going through a bad patch. However, right before getting the loans, you have to make a proper research and look at the options that are being offered. By getting the loans at the right time with appropriate offers, you will eventually come out of the crisis.