Do Guarantor loans really work?
Well, the answer to this in a nutshell is yes they do. It’s important that you understand the concept of a guarantor loan and also understand that if you are being the ‘guarantor’ part of the guarantor loan, that fully appreciate the role you will play in the application.
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Our panel of brokers are experts in trying to find clients the right loan for their circumstances.
In essence, a guarantor loan means that the applicant is applying for a loan along with someone else who will vouch for them, in effect they are guaranteeing that the loan will be repaid even if the applicant fails to make their monthly payments. This is because the applicant has usually been refused a loan through the traditional channels such as banks and loan providers. It may be for one of the following reasons:
This is where a guarantor loan comes into its own. Because the lender does not assess the applicant on their own merits, the issue of bad credit or unemployment does not cause them an issue. The application is assessed on the guarantors ability to repay the loan. So if Miss A approaches a high street lender for a loan but she does not work and only receives state benefits. After getting refused she applies to a guarantor loan specialist. They also refuse but ask her to nominate a guarantor, someone like a friend, neighbour, relative that has a fairly clean credit history that will support her application.
The application will be assessed on the guarantors ability to repay the loan should Miss A default on her payments. So, Miss A gets her loan and makes the monthly repayment directly to her lender and the guarantor sits behind the loan and will guarantee to make the full payment should Miss A default on her committments. That is why a guarantor loan is the best way forward for individuals who suffer from a less than perfect credit history.
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