If you have a bad credit record or don’t have any credit history at all, getting a normal loan can be difficult for you. You might either not get a loan at all or end up paying higher interest rates than is necessary – which could worsen your credit score or even put you into major debts. So this is why a new type of loan has been introduced in the UK, called the guarantor loan. In this type of loan, since you don’t have a credit history, you have to get a third party with a strong credit record to act as your guarantor.
So what exactly are these guarantor loans?
Guarantor loans are basically unsecured loans which will require you to take the help of a third person to act as your guarantor. These loans can have any term between 1 to 5 years which means that it will depend upon you as to how fast you can get rid of this debt. You can calculate your exact amount and interest rates at guarantorlender.
You can borrow these loans anywhere between 1000 to 7500 pounds and some lenders also give loans of 500 pounds. These loans are provided to people who are unable to get loans from the institutionalized banks. Guarantor loans are very much unlike the regular payday loan which is why you will have a lot less interest rates than the payday loans here. Also, there are no arrangement fees and there are no charges upfront. So these are by far the most flexible ways of getting a loan and repaying them.
Okay, but will it be a right one for me?
Yes, this question is bound to come and it should, because each person has different ranges of income. If you have a credit history where you have been rejected by other lenders, then a guarantor loan might work for you. This is because these types of loans usually have a lower interest rate. Also, finding a guarantor is not an issue because more often, the spouses or the close relatives act as a guarantor. You only have to give them the estimates, which you can do via the online loan calculator.
These loans also help you to create a credit history in the first place. So if you don’t have a credit history, these will help you to have one. So that’s great news for the first-time loan takers.
Who can act as a guarantor?
Even though some institutions need your guarantors to be over 18, it is usually asked that the guarantor be over 21 years and not more than 75 year of age. They also have to have a good credit history and they have to own a home in the UK – because their home will be mortgaged. Your guarantor will be checked like a regular credit check – they have to provide their bank statements, ID proofs and their bank details of course to be approved for it.