How Guarantor Loans Can Benefit You
How Guarantor Loans Can Benefit You
How Guarantor Loans Can Benefit YouWith the way the financial market is today, borrowing money can be hard for most people. With the banks having new stringent lending rules, even people who have a good credit history are finding it difficult. For people with bad credit or no credit history at all, will find it virtually impossible to find anyone willing to help them.There are not many options available for people who have bad credit or no credit history this is because they are classed as high risk to the bank. For individuals looking to borrow money and have never borrowed before, it can be very difficult for the bank to assess them because they have no credit history, even if they are in steady employment and are earning a good income the banks just don't have the proof that they will repay the loan each month.There is an option for people who have found themselves in this situation and that is with a guarantor loan. This type of loan will require a person of good credit standing to act as a guarantor for the loan. Anybody that has good credit can become a guarantor for the loan, although most people ask a family member or close friend for help, it is possible to ask a work colleague if you have no other options.It is essential that the guarantor understands the exact role he or she will be taking on with a guarantor loan. They need to know about the risks involved; for instance - If the borrower cannot afford to pay back the loan the responsibility will fall on the guarantor to make sure the loan is paid in full. It would be sensible for the guarantor to ask for access to the borrowers finances bank account, monthly income and to know that he or she are in steady employment, that way the guarantor will know whether he or she can afford to pay back the loan.The guarantor loan is an unsecured loan and many people think these loans are costly, however the loan is based on the guarantors good credit rather then the applicants which means they are less expensive then most people think they are. If the borrower pays back the loan on time he or she can use their guarantor's good credit score to improve their own.It is a big worry for guarantors that if the borrower defaults on the loan, that they could lose their valuable possessions like their home for instance. In most cases the guarantor will not need to worry about their collateral because this is an unsecured loan. However if the borrower cannot pay back the loan and no other payments are made, the creditor could decide to take it to court and turn it into a secured loan. This would only be done as a last resort if no other arrangements could be made for payment between the borrower and the guarantor.Closing CommentsThe guarantor loan has become massively popular for people trying to restore or gain a credit history. To get the best deal, search guarantor loans online.