Unsecured Guarantor loan
Non homeowners have historically found themselves in a more difficult position than homeowners simply due to the fact that they do not have any security to offer the lender, i.e. a house. This means that their chances of getting a loan are much more difficult and if the potential borrower is looking for a loan over £1,000 then they can usually forget it (loans of up to £1,000 can usually be obtained via a payday lender) as they have virtually no chance whatsoever unless they have an absolutely perfect credit history.
That is of course unless the borrower applies for a loan with a guarantor to endorse their application but more about guarantor loans shortly.
The reality is this: Non homeowners have to face a number of difficulties while meeting the requirements of the lender. They can’t apply for any loan easily because of their position as a tenant, whether that is as a private tenant or as a council tenant. They don’t have an asset in the form of their house, which they can put as a security to the lenders and if by some miracle of gigantic proportions they do get offered a loan, it will be with a much higher rate of interest attached to it which in turn means higher monthly repayments.
However (and this has always been the issue with sub prime loans in the recent past) most borrowers do not care about the APR at all as the only thing that matters to them is that they can get the loan, repay it every month and still enjoy a reasonably comfortable lifestyle.
These unsecured loans (also known as tenant loans) are very popular in UK and the fact is that they are likely to become even more popular as people struggle to obtain a deposit of 25%+ to buy their own home and this means that renting a property and becoming a tenant instead of a homeowner is likely to become the norm, not the exception.
In terms of what a tenant can borrow, this differs from lender to lender. Some lenders will allow loans of up to £1,000 (payday lenders) and some lenders will grant loans of up to £5,000. Whitestar Loans are a guarantor loans lender and will allow loans of up to £7,500 as long as there is a suitable guarantor in place and the borrower meets certain conditions which are:
- Must be employed
- Must not be in a debt management plan
- Must not be in an IVA (Individual Voluntary Arrangement)
- Must not be bankrupt
The guarantor loan process.
This is the easy bit and we have broken it down into stages.
• Apply online at www.anytypeofloan.co.uk/enquiry
• We will process your application and call you to let you know how much you have been approved for.
• Once you have agreed, we will send the paperwork out to you and your guarantor.
• Once we receive that back from you both and everything is in order, we will pay your loan out (all loans are paid into the applicants bank account, not the guarantors.
Once the loan has been paid out, the responsibility falls squarely on the shoulders of the borrower as it is down to them to ensure that they maintain the repayments each and every month, however there is a positive side to paying the loan back which is this;
As the loan is in the name of the applicant who has become the borrower, it allows them the luxury of having their repayment history reported to the credit reference agencies. Now, if the borrower doesn’t keep up with the repayments this could be considered to be a bad thing as all it will do is show how that the borrower still hasn’t their act together and they will simply be regarded as a bad risk and the chance of them getting a loan again in the near future is pretty low.
However if the borrower makes all of the repayments on time every month then it has the opposite effect; it shows prospective lenders that the borrower has the ability and inclination to repay their loan as they agreed to when they took the guarantor loan out and instead of being perceived as a bad risk it shows that they are now likely to be assessed as a good credit risk.
Every cloud and all that.
So if you are a tenant and you are looking for an unsecured loan, go and find yourself a guarantor and before you know it you could be looking at a loan of £7,500.
