Guarantor loans are special loans that allow people with a poor credit history (even an absolutely terrible credit history!) to obtain a loan of up to £10,000 and assuming you find someone applicable to endorse your application (the guarantor), then you are guaranteed to get accepted.
A guarantor loan is an unsecured loan which means that it is not secured against your property or other asset (this is definitely not a logbook loan or anything similar!) and is particularly suitable for:
- Tenants – private or local authority
- Homeowners without equity in their property
- People living with their parents / family
In addition and as mentioned before, there are absolutely no credit checks which means that even if you do have a track record of missed rent or mortgage payments, late credit card payments or even if you have a few defaults or county court judgements (CCJs), then as long as you provide a suitable guarantor, then you are 100% guaranteed to be accepted.
How does a guarantor loan work?
The loan works like this; the borrower makes an application through the online enquiry page here at www.anytypeofloan.co.uk as normal. They will also provide details of the person who will be their guarantor (more details on who can be a guarantor further on) on the application.
We will then work out the repayment schedule, the interest rate (usual high street rates) and the repayment period and then we will assess the application based on the guarantor’s credit history, not the borrower’s. Once agreed the loan will then be paid into the borrowers bank account and a monthly direct debit will be setup in the borrowers name and all monthly repayments will come out of the borrowers bank account.
So where does the guarantor come in?
Aside from the initial assessment, the guarantor will have no further part to play unless the following situations arise:
- Borrower cannot repay the loan
- Borrower will not repay the loan
If either of these situations develop, then the guarantor will become liable for the outstanding loan including costs. The lender can also instigate legal proceedings against the guarantor, not the borrower, if the loan is not repaid under the terms of the loan agreement, so any potential guarantor need to understand the role they will play and their legal obligations in respect of the loan. Obviously, any non repayment will reflect on the guarantor and not the borrower which means that the main credit reference agencies such as Equifax and Experian will be informed and this will severely hamper someone’s ability to get accepted for any future credit.
Who can be a guarantor?
As long as the person endorsing your application is a homeowner, has a clean credit history, is employed in a full time position and is over the age of 21, then it can be absolutely anyone. You could call upon a family member, neighbour, colleague or in fact anyone who has a clean credit history and is prepared to back up your application and of course, be responsible should you not meet your obligations with the loan.
And finally it is worth remembering that taking out a guarantor loan will mean that the borrower will be taking on certain responsibilities and regardless of whether they are responsible for the repayment or non-repayment of the debt; they have to understand the implications. However there is a plus side to this as it also means that if the loan is repaid on time every time, then the borrower’s credit profile will also improve as an indirect result of the loan being conducted properly throughout the term.
Money or debt worries?
If you have then you should not even be considering a loan, guarantor or otherwise as it will simply add to your debt. Whilst an instant cash boost is what you might need there and then, think of the consequences. If you take a loan out and it is more than £1,000 then it is likely that you will have to pay that loan back over a few years, more than likely 3 or 4 years. That means yet more debt you have to pay back and it also means that your monthly disposable income is reduced yet again.
Is that what you really need?
So if you are thinking of taking out an unsecured loan with us, before you do, take a step back and give yourself 24 hours before you decide if you need it or not. If after 24 hours you think that you don’t, then definitely do not take a loan out.
The reason for this is that so many people have a knee jerk reaction to needing money rather than thinking of the long term benefit and that is why we ask all of our potential borrowers to think long and hard before they make that final decision to take out a guarantor loan.
To find out more (and remember that we never charge any upfront fees) simply complete the simple online enquiry form here.