Guarantor loans now offer poor credit applicants a viable and reasonable solution to their ongoing finance problems.
Guarantor loans are becoming the finance of choice for people with a poor credit history. Without a guarantor loan, borrowers wouldn’t have the ability to afford to take on a mortgage and instead would be forced to spend their life renting a property without any way of being able to buy their own dream home.
A Guarantor Loan is a new way of enabling people with poor credit rating or who have been refused elsewhere or indeed any other circumstances preventing them from obtaining mainstream credit, a chance to get a loan by getting somebody who is 21 or over, a homeowner with a decent credit history, who will act as their guarantor.
Taking this type of loan out is a big decision to make, especially for the person who is the guarantor, as the take all the risk, while the person receiving the funds (the applicant) takes on no risk whatsoever. Of course, there is an element of respect involved in these loans – if someone’s close relative is willing to risk everything for their family then their family member feels obligated to pay the loan back. When it comes to secured guarantor loans, it may be as big a motivation as losing a property – because ultimately, it could mean losing the family home, depending obviously on whether the guarantor maintains payments on the loan.
Even when you have considered the suggestions above there is still no way to guarantee that you won’t obtain burned when signing on to be a guarantor. The only reaction you can have is protect yourself to the best of your abilities and try to stay in contact regularly with the owner of the debt. A guarantor loan is a form of unsecured credit, so failing to repay the required payments each month will not lead to the guarantor losing their property or valuables because the loan is had not been secured against it.
It is vital to know that when you’re guaranteeing a loan for someone that the unsecured debt could at some point be changed into a secured debt if the lender decides to take legal action. This would the last resort if no other agreement could be made. You should always read the small print and make sure you understand exactly what you are getting yourself into. There are a lot of firms who provide guaranteed loans but they provide rather unfavourable terms and conditions and you should always check to see if they will charge you an upfront fee because if they do; you should stay well clear.
You can expect to be paying more for a guarantor loan in terms of costs and interest
because by having a bad credit history you are presenting more risk to the lender. However, that saidFree Articles, you shouldn’t be paying extortionate fees for this type of loan. Often damaging credit history loans have various ridiculous costs and charges that will only ever put you in a worse situation than when you started but with guaranteed finance this is not the case