Are guarantor loans guaranteed?
Yes and no is the answer to this question. Guarantor loans are just another form of personal unsecured lending, the only real difference between a loan with a guarantor and a loan without a guarantor is that all of the credit checks you would expect on a loan are completed on the guarantor, not the person applying for the money.
What does this mean for the applicant? Well, it means that if you are looking to borrow money from a lender and you have a poor credit history such as missing a few of your credit card payments, being a day or two late in paying your rent or even if you have a couple of defaults or county court judgements, then you would probably get declined by a traditional lender such as your bank or building society.
So why is a guarantor loan guaranteed?
If you can find someone to endorse your application and when we mean endorse we mean someone that you know who is prepared to ‘vouch’ for you. This means that this person (or the guarantor as they are known) is effectively saying that they trust you to repay your guarantor loan on time every month. The guarantor can be anyone that you choose and as long as this person is over 21, a homeowner and has a pretty good credit history that we find acceptable then yes, you are guaranteed to get your loan.
Who can be a guarantor?
Mum, dad, brother, sister, friend, other relative, boss, colleague, neighbour, etc. As you can see, as long as they meet the criteria above and they pass our credit checks then they are absolutely acceptable. The other thing to note is that you must ensure that the guarantor is fully aware of his/her responsibilities in terms of the loan being repaid if the applicant cannot for some reason.
