What are Guarantor Loans?

They are precisely what the name suggests. Guarantor loans refer to loans that can be taken by an individual with the help of a guarantor. These loans prove to be ideal for individuals who have a bad credit history and are unable to get unsecured personal loans.

Who is a Guarantor?

A Guarantor is a person that the borrower knows well like a friend, a family member, or a colleague, who has a good credit history. The guarantor needs to co-sign the loan taken by the individual and must agree to cover the repayments in case the borrower fails to make them in full, and on time. While it helps if your chosen guarantor is a homeowner, today, a vast majority of lenders readily offer guarantor loans even when the guarantor is a non-homeowner or a tenant.

Are Guarantor Loans Right for Me?

Yes, guarantor loans can prove to be the perfect way to borrow funds, especially –

  • If you have a limited or no credit history
  • If you have a bad credit rating

Unsecured personal loans for bad credit are available in the market. However, they can often prove to be costly due to the high APR. Moreover, if you have bad credit, the amount that you can borrow in the form of personal loans is limited.

On the other hand, when you opt for a guarantor loan, your APR is relatively low due to the reduced risk proposition of the lender.
You can also borrow a greater sum of money up to £10,000 and in some cases even up to £20,000.
Moreover, you also have the flexibility to pay the amount over a span ranging from one to five years.

When you repay a guarantor loan in full and on time, your credit score will get a much-needed boost.
This loan can also help you build a credit history if you don’t have one already.

While a guarantor loan entails many benefits, it also has its own set of drawbacks. To begin with, finding a guarantor who trusts you, given your relatively low credit score can be a tricky thing.

Moreover, in case you are unable to make the repayments, and your guarantor has to do so on your behalf, it can severely affect your relationship with the guarantor.
Hence, you should think twice and only go ahead with this loan type if you absolutely need it.

Can I Get a Guarantor Loan with Bad Credit?

Yes, guarantor loans are primarily designed for individuals with less-than-ideal credit ratings. All you need to do is find a guarantor, who has a strong credit history, stable income, and employment, and is willing to co-sign the agreement.

When the lender knows that there is a financially responsible person who is ready to back your decision, it increases the lender’s confidence in your ability to repay the loan. It also reduces the risk assumed by the lender, therefore making it easier for you to acquire the funds.

Key Features of Guarantor Loans

Some of the most noteworthy features of a guarantor loan are –
  • Loan Amount – £500 to £20,000
  • Repayment Period – 12 months to 60 months

How Can I Apply for a Guarantor Loan with Loan Broker?

The process is fairly simple and hassle-free. All you need to do is follow the below-mentioned steps and get a guarantor loan –

  1. Tell Us About You

Fill in the online application form with personal and professional details such as – date of birth, contact number, email address, current employment status, bank account details, residential address, and the loan amount you need and for how long. We will also need the details of your guarantor.

  1. Get the decision

Our direct lenders will verify the information provided by you. They will also assess your loan eligibility to evaluate your creditworthiness and that of your guarantor. They need an assurance that you and your guarantor will be able to repay the money to them, without fail. The decision made by them will be displayed on the screen within a few minutes.

  1. Loan disbursal

If the lender approves your loan application, the loan amount will be disbursed by the lender to your bank account. The time taken for loan disbursal depends on the lender you’ve chosen and your bank.

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FAQs

To get a guarantor loan, you must fulfil the following criteria – You should be at least 18 years of age You must be a resident of the United Kingdom You must provide proof of identity and proof of income You should have a UK bank account In addition, it is crucial that your guarantor is also a UK resident, has a good credit history, is a reliable source of income, and has the ability to repay the loan in case you default. Some lenders also require the guarantor to be 21 years or older in age. It is, of course, essential that the guarantor agrees to co-sign the loan and to repay the same in case of any default.
Yes, you can repay your loan earlier than the stipulated date. However, before doing so, do check with your lender to see if there is an ‘early exit fee’. If there is, then you might want to check if the early repayment is worth incurring the additional fee.
This loan can be used for a wide variety of purposes, including but not limited to home improvements, vehicle repairs, funding a vacation, paying for school fees, wedding expenses, paying off a smaller debt, etc. In most cases, the lender doesn’t place any restrictions on the usage of the loan amount, except for illegal purposes. You must also know that the loan amount cannot be invested in stocks and shares in the United Kingdom or elsewhere.
Since the risk proposition for the direct lender is lower in the case of these loans, they are usually offered at a lower interest rate as compared to no guarantor loans of a comparable amount.
Almost all guarantor loans have a fixed interest rate for the entire tenure of the loan. However, some lenders may not follow this norm. You should therefore make sure that you know the type of interest levied on your loan before signing up for the same.

Find Homeowner Loan – With Loan Broker

Loan Broker is an FCA registered credit broker that operates across the major cities of the UK. All the lenders associated with it are also authorised by the financial regulator. The mission is to promote responsible lending and hence, our lenders perform soft credit checks to offer initial quotes. Soft credit checks are safe as they do not leave any footprint on your credit report and doesn’t even harm your credit report.

We do not charge any upfront fees to our consumers. We offer an array of unsecured loans such as – debt consolidation loans, self-employed loans, to help borrowers get back on their financial track. As a credit broker, we help our borrowers to find the right lender by considering their requirements. With Loan Broker by your side, you can choose no obligation loans. We are loan brokers, committed to extending a true hand of help for borrowers seeking hassle-free, and affordable loans despite bad credit rating.

Borrow responsibly and repay timely.