Can’t Get a Loan on Your Own? Try Guarantor Loans!
Guarantor loans are for people who find it very hard to acquire new credit. This is a beneficial and affordable loan that needs a credible guarantor who can give you a particular loan. A lending company can always consider different types of bad credit and can even offer a very reasonable rate.
When and How to Avail Guarantor Loan
Generally, evaluation, review, and study of lousy credit history, even for rejected applications, give them a second chance. All you need is a reliable and eligible guarantor. Although guarantor loans are a new type of lending, the good thing is it allows people who are in dire need of cash to avail of a loan. So whether it is for paying your utility bills, vacation trips, paying your child’s education, or starting a small business, a guarantor loan is possible.
Those who apply for a guarantor loan should be of legal age. This means you should be around the age of 21 to 61 years old with employment where your salary debits to a bank. However, if you do not have a job, you need to have a bank account that allows direct debits. The guarantor should be equally or more than qualified and can pay the loan because it will be a significant basis for the approval of the guarantor loan.
Guarantor Loan Rates and Payment
Some companies may offer a reasonable interest rate. Yet it is better to choose those who offer fixed interest. That’s because the budget is very significant, especially in loan payments. Fixed interest rates mean you pay the same amount until you clear the loan. The fees are also always on time.
Before applying for a guaranteed loan, however, carefully select the lending companies that provide transparencies. The hidden, additional, or surcharges that can be painful in your pocket. It can in fact add more to your financial burden.
Types of Guarantor Loans
Guarantor Personal Loan. A joint type of loan, the borrower is either you or a member of a family, a close friend, boyfriend/girlfriend. It can also be just someone close to you who agrees to share the responsibility of repaying your loan. This person will support your asset or credit to whatever extent you need.
Some borrowers who seek loans for personal reasons do not satisfy the requirement, including insufficiency of income for loan repayments or no private property to back up the loan. The guarantor, therefore, plays a vital role in maximizing the approval of this loan. That’s because his assets and properties also come handy in supporting a guarantor loan. Two people shall be liable for a single loan.
Guarantor Business Loans. This type of loan is common among people who want to start and invest in a small business. Businesses that want to add to their existing capital, purchase equipment, provide for production costs, and maintenance, can also avail of this loan. The guarantor can present his property and other assets to support the business loan. There is, of course, a high probability of positive approval. That’s because, like guarantor personal loans, it is better to have two capable people pay a particular loan rather than a single-payer. This strengthens a higher possibility of acquiring the loan.
However, there is a wrong perception that the amount of loan will depend on the value of your guarantor’s property. The amount of loans usually starts lower for the first time and gradually increases in the succeeding applications. It depends on the performance of the borrower in terms of repayment.
The Guarantor’s Credibility
The guarantor can make or break a particular loan. Investigations on their credit ratings and history, assets, liabilities, and expenses take place in the process. All these factors determine if a guarantor qualifies as a co-borrower.
When the guarantor receives approval, the applicant benefits from it. However, if the principal borrower fails to pay the loan on time, the guarantor will have to pay off the loan.
In the end, each person needs to think cautiously if a guarantor loan can work for them. Carefully evaluate the purpose it will serve you. It is also important to think if you should ask a friend or a family member to be your guarantor for the loan. Remember, splitting the responsibility means a more significant task and liability for both parties. If the advantages of a guarantor loan supersede the negativity of the goal, then go for it. But make sure to talk about the loan with your guarantor thoroughly.
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