An Introduction To Guarantor Loans

In recent times we have seen the introduction of guarantor loans

, however the knowledge of these loans are not widespread. Simply put, a guarantor loan is one that requires a guarantor to access the funds because the individual in question does not have proper credit history. Individuals with credit status that is terrible benefits from this type of loan as it has the ability to improve their credit score and the only requirement will be for the borrower to repay the amount borrowed on the scheduled date agreed upon. At present you are able to borrow as much as five thousand pounds with a payback period of 36 months. By paying before the agreed time the borrower has the opportunity to pre-terminate the contract before the initial deadline.

Individuals who offer themselves as guarantors might have to repay a loan in the event that the original borrower in unable to. This means that if the borrower cannot repay the loan, the guarantor is willing to repay the loan in place of him/her. The perquisites that are need to become a guarantor varies in different countries but in most cases the individual must be receiving a income, impeccable credit history, of legal age and it would be a plus if they owned a home. It is also required that the guarantor is not financially connected to an applicant, for instance, the guarantor should not be the applicants husband or daughter.

Guarantors gain relief in knowing that the borrower will actually repay the loan. Therefore, the guarantor will never have to repay the money that was borrowed by the borrower. A very crucial point is to know that you are entering a debt management schedule or an IVA or possible bankruptcy as a result of the indecisions of the borrower if he/she allows the guarantor to repay the loan. Circumstance such as these will strain the relationship of the applicant and the guarantors should make preparations for this. Loan companies that are very reputable will ensure that the guarantors are able to repay the amount being borrowed by the applicant.

Therefore you should take into consideration the requirements needed to become a guarantor and that it involves a number of risks. This is because end the end, if the applicant is unable to repay the loan, the guarantor will have to repay the loan. You should remember that persons, who apply for guarantor loans, have a reason for doing so. Therefore it is the duty of the guarantor to effective find out why the individual wants to access this loan. In addition to this it is up to the guarantor to understand fully the level of risks involved.

by: Alex Clarke

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