Guarantor loans for students
Leaving University is a time to rejoice for most students as it means they can finally put all of the knowledge they have gained to good use and start a new career in a field that they love. But what happens if you have built up extensive debts and let’s face it, unless you are fortunate enough to have wealthy parents who have paid for all of your student / university expenses, you will probably have a debt that will run into the high 4 figures at the very least.
This debt could prevent students from buying a property or even renting a property simply because the repayment on the debt is too onerous that it leaves nothing in the account each month, even if that student is working. Now in the recent past that would not have been a problem. A graduate could simply apply to the local bank and obtain a loan at decent rates and arrange a repayment period over a longer than usual period (to keep the repayments down) so that it becomes afffordable. Unfortunately, those days are gone…
How can a guarantor loan help?
Guarantor loans can help because they effectively ignore the credit history of the individual making the loan application. That means that if a graduate has just left university with say, £7k in debts and is desperate to pay it back but they can’t because they are trying to save up for a deposit on a new rented flat (phew! Life is tough for graduates!) then there is an opportunity for graduates to take out a loan but with a guarantor. This means that the guarantor (the person ‘endorsing’ the application and confirming that they are good for the repayment each month) will be the one who is credit checked, not the ex-student or graduate. The graduate will still receive the cash and they will still be the one making the repayments each month, the only difference being is that if the graduate cannot repay the loan for any reason, then that is where the guarantor steps in.
The other fantastic thing about guarantor loans is that they allow lenders to take on a little more risk. This means that if the person applying for the loan has a little bit of adverse credit such as a few late or missed payments and maybe a couple of defaults, then most guarantor loan lenders would be ok with this as they have a pretty good chance of getting their money back simply because the loan comes with a guarantor.
So instead of a traditional loan where a student or graduate may get declined, try the new option of a guarantor loan instead.
