How To Get A Guarantor Loan With No Credit History

Those who have never borrowed money before can find it difficult to find a bank that will help them to obtain a loan

. This is because they have no credit history which makes it hard for the Banks to assess the individual to know whether they will pay back the loan. Therefore the individual is put in the high risk category.

People with bad credit history can also find it hard to find a bank or company to help them. Lenders have become a lot more stringent about whom they will lend too. People that are in this situation can start to feel deflated and lose hope that they will be able to obtain a loan at all. There are options available, only a few, but options nonetheless and one of these is a guarantor loan.

To obtain a guarantor loan you would need to find somebody with a good credit history to act as a guarantor for the loan. The person you choose to act as guarantor for the loan could be anyone, for instance; a close friend or family member or a work colleague. Applicants normally choose to ask a family member to act as a guarantor for the loan, these loans are fast becoming popular.

The guarantor loan is an unsecured loan. Even though unsecured loans are more expensive then a secured loan, the applicant applying for the loan does not have to worry about having adverse credit or no credit history at all. This is because the loan is not based on the applicant, the loan and the interest rate will be based on the guarantor's good credit history, meaning the loan should not be more costly than any other unsecured loan.

As with obtaining any loan there are risks involved. With a guarantor loan the individual who is at most risk is the person acting as the guarantor for the loan, if the borrower does not meet all the repayments then it is the guarantor who will be resonsible for paying off the loan. The borrower must make sure that they have enough funds to repay the loan before thinking about obtaining this loan and the guarantor needs to have full knowledge of the role he or she are about to undertake before signing any contracts or agreements.

The guarantor shouldn't have to worry about losing any of their valuables or possessions if the borrower cannot repay the loan, this is because the guarantor loan is an unsecured loan. The creditor could however decide to go to court and turn the loan into a secured loan so they can refund the money lost. This would be done as a last resort only if no other arrangements could be made between both parties to pay back the loan.

Final Thoughts

Guarantor loans do come with benefits, they can help people gain a credit history or restore their bad credit. It is vital that when looking to obtain a loan you fully understand everything before signing the agreement. Search online for the best deals on guarantor loans.

by: Steve Smith

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