Understanding Guarantor Loans

Understanding Guarantor Loans

If you’ve recently been denied a bank loan and are struggling to make ends meet, you might be interested in other methods of borrowing to get the cash you desperately need. Some people are lucky enough to have wealthy family members or friends that can provide them with a cash advance with no interest required. However, needless to say, that option isn’t available to many people, and that means you might need to explore other options. Of course, you might be worried that you’ll have to risk your home in order to secure a loan, but that’s not the case if you apply for a guarantor loan. Guarantor loans are often more accessible to those with a poor credit score than bank loans, and the money you borrow can be paid back over a period of five years if you need to keep the monthly repayments manageable.

How do you Get a Guarantor Loan?

The process of getting a guarantor loan is actually quite simple. Here’s a quick rundown of what’s involved:

  • Provide your details – You’ll need to give the loan broker your contact details.
  • Verify your existence – This is usually done via SMS or email, though the loan provider may wish to contact you directly if they have a few extra questions.
  • Provide the details of your guarantor – Then you’ll need to provide details for your guarantor, including the nature of your relationship with them.
  • The loan provider runs checks – To make sure you’ll be able to pay back the loan, the provider will run a variety of credit checks on both you and your guarantor.
  • Provide bank details – As long as the provider is happy that you can repay the loan, you’ll now need to provide them with your bank details.
  • The money will be transferred to your bank account – Finally, after all the above steps have been completed, the funds you need will be placed in your bank account.

How Much Could You Borrow?

Most providers will be happy to lend you a minimum of £1000 and a maximum of £15,000 and you’ll be able to decide how you pay it back, though most providers will expect the full loan to be repaid between two and five years as guarantor loans are short-term finance.

Does the Guarantor Need to be a Family Member?

In most cases, your loan is more likely to be approved if you and your guarantor have a close relationship and the guarantor has a good credit score. However, your guarantor could also be a friend, colleague, neighbour, or anybody else who trusts you enough to guarantee your payments.

Is It Safe?

As long as you choose a reputable loan provider, you have very little to worry about. You won’t lose your home or your assets should you be unable to make payments because that’s why you have a guarantor instead. But just remember that getting a loan is a big responsibility that you need to take seriously.

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