For a generation of students now leaving university the prospect of leaving university is probably more daunting than they could have imagined when they started their university career. The recession and subsequent economic climate have meant that the rewards the graduates may have expected to reap from their education may be a lot harder to come by. The nature of University study and student living mean that many students will have already left home to take up their studies. A job offer will often mean a move out of their student accommodation even of they remain in the same city to work.
The costs of moving home, and possibly towns, can be daunting for a graduate leaving university with student loans and little capital behind them. Parents have often been seen as the traditional source of funding for these first steps but many will not be in a position to offer ready cash - partly due to the economic conditions and partly due to the expansion of university places across the socio-economic groups.
At the same time, access to credit has been harder to come by over the last 2 years particularly for a graduate who has just started work and cannot yet provide 3 months worth of bank statements showing current income. However as the traditional unsecured loan products have receded a new product has taken their place which may help offer a solution. Guarantor Loans work on the principle that the applicant will provide a Guarantor to back their application, usually a Homeowner. Should the borrower default on the loan the lender can ask the Guarantor to step in and make the payments instead.
The provision of a Guarantor effectively reduces the risk to the lender so the lenders, in turn may be inclined to accept less than 3 months proof of income. One lender we spoke to stated that in the example of applicants starting new jobs it may well be enough to have i) confirmation from the employer that the applicant had started work and ii) their agreed salary.
So if a graduate can find a Guarantor then they may be able to use a Guarantor Loan to make the transition into working life a little easier.
