Guarantor loans have gained a lot of popularity with those who need to borrow money, but it’s important that you understand exactly what they are and how they could potentially help you. The more time you take to learn about guarantor loans, the better off you will be overall.
By: Hitesh Khan/
What is a Guarantor Loan?
A guarantor loan is essentially an unsecured loan that requires the borrower to have a second person acting a “guarantor”. This second person will agree to assume responsibility for paying back the loan if the primary borrower cannot for whatever reason. These loans tend to have a payback period from 1 to 7 years, and you can typically borrow any amount from $1,000 to $35,000.
It is quite common for lending institutions to insist on guarantor loans.
Is a Guarantor Loan right for me?
There are a number of things that you will need to consider when trying to determine whether or not a guarantor loan is right for you. Guarantor loans are not for everyone, and they are typically best for people who have difficulty getting a more traditional loan due to a poor credit history. More and more people have starting taking out these loans because they are so versatile and open to just about anyone, provided you can get a guarantor.
You will most likely be able to fill out an application for a guarantor loan online, which means that you don’t have to worry about going down to some office in person. This makes the process of getting one of these loans quick and easy. You will be required to fill out some basic personal information, such as your name, address, social security number and show proof of income. The lender will use this criteria to determine how much of a liability you are so they can decide whether or not to approve your application.
A guarantor can be just about anyone who is willing to assume responsibility for paying off your loan if you are not able to. This can be a friend, family member or anyone else. Your relationship to the guarantor doesn’t matter at all, and it’s not something that the lender is going to ask about. It is a good idea for you to choose someone that you can count on to pay off the loan if you are not able to for whatever reason though. The person you choose as your guarantor should ideally be someone who you are fairly close to.
Finding a Lender
There are lots of different private lenders that you can get a guarantor loan through, but you will want to take the time to see what your options are like before making a final decision. The more time you take to do this research the better, because it is not something you should rush into by any means. By doing your research and choosing the right lender, you will be able to minimise your chances of getting a bad deal. Things can go wrong very quickly if you select a bad lender, which is why you will need to make a point of looking for one that is highly reputable.
Read the Fine Print
It is imperative that you take the time to read the fine print before signing a contract for guarantor loans.
By doing this you will be able to avoid any problems later on. The contract that you sign will provide you with all of the information you need about the loan, including the total amount and the specific date it must be paid back on. You will also be able to learn about any and all fees and penalties you may be subject to for late or non-payment. It is highly recommended that you take all the time you need to look this contract over before signing.
Interest on the Loan
You should also know exactly how much interest you are going to end up paying on guarantor loans you take out. It is important to keep in mind that interest rates on guarantor loans can be higher than standard secure loans, simply because they don’t require you to put down any collateral in the event that you cannot pay back the loan in full. The interest rate that you pay on your loan will depend on a number of things, including where you love, what your credit history is like, and even the specific lender that you choose to borrow the money from.
Guarantor loans are an excellent option for almost anyone who needs a significant amount of money but has been turned down in the past for more traditional loans. If you have bad credit, you will certainly want to consider applying for guarantor loans right away.
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