People with bad credit ratings often find it difficult to borrow money. There is one way to get a loan with a poor credit rating and this is applying for guarantor loans bad credit. The guarantor loan provides people with a poor credit rating the chance to borrow, but there are pros and cons that come with this type of loan.
What Is A Guarantor Loan?
It is possible that you have never heard about a guarantor loan. In this case you might be wondering what it is and how such a loan might help you to borrow money even with a poor credit rating.
A guarantor loan requires you to ask someone to stand as your guarantor when applying for a loan. This could be a good friend or a relative, but not a spouse or partner.
The trouble with having to ask someone to stand as a guarantor is that you have to tell him or her that you are having financial difficulties and need a loan but you cannot get one on your own due to having a bad credit rating. Many people feel embarrassed to talk to a third party about financial issues, more so a good friend or relative.
Another issue is that it can cause problems with relationships and friendships after the loan has been taken out. If you suddenly find yourself unable to continue meeting the repayments of the loan the person who stand as guarantor has to take over the repayments. It is one thing to stand as guarantor but another to actually take over the repayments. The relationship may become strained to the point of falling out over money.
Are You Eligible For A Guarantor Loan?
One of the first things you need to do is check to find out if you are eligible to apply for a guarantor loan, or any other type of loan. This means you need to meet the criteria set out which includes:
- Having a regular income;
- Being over 18 years of age;
- Living in the UK;
- Holding a UK bank account in your name;
- Having a debit card attached to the bank account.
Just as the borrower has to be eligible to apply for a loan, so does the person standing as the guarantor. It does help if the guarantor has a good credit.
Ensure You Both Understand the Terms
In the past guarantor loans have been taken out and the person standing as the guarantor has not really understood the terms of the agreement they are signing or not seen any documentation. In this case, they have not understood the terms and conditions and the fact that they have to take on the loan if the person they guaranteed cannot meet the repayments. This has led to financial difficulties on the part of the guarantor.
If you are considering guarantor loans bad credit, ensure that both you and your guarantor understand the terms. This includes the APR on the loan, how much the loan is going to cost in total, when the repayments are due, any fees added onto the loan and how much interest will be added on.
Take Out the Loan with a Reputable Lender
If you need to borrow a large sum of money, you first might want to try applying for a personal loan instead of a guarantor loan. Personal loans are more difficult to find approval for but they are not impossible. We work alongside lenders who do consider all circumstances along with credit ratings. There is no guarantee that you will be approved for a personal loan but there is no harm in trying with us.
Just as with the guarantor loan the personal loan might allow you to borrow up to £15,000 and you might be able to spread the repayments out for up to 36 months.
If your credit rating is too bad that the lender needs to minimise the risk they may suggest a guarantor loan. When applying for such a loan you should take it out with a reputable UK lender. We can help you to find a suitable loan as we can try to match you up with a lender from a panel of lenders. Lenders we work alongside always:
- Check your credit rating;
- Consider your current circumstances;
- Take into account the ability for you to be able to repay the loan;
- Offer some of the most competitive rates for loans;
- Offer numerous loan options;
- Provide you with the terms and conditions so you can check the loan is suitable for your needs.
Alternatives to Guarantor Loans Bad Credit
If you only require a small amount of money, you might want to consider a payday or short-term loan instead of the guarantor loan.
These loans allow you to borrow between £100 and £1,000 and spread the cost of the loan from one month to 12 months. It is generally easier to find approval for payday and short-term loans as the amount of money borrowed is smaller and so the lender is taking less of a risk.
Payday loans and short-term loan may be ideal if you find yourself short of money and something unexpected comes your way. For instance, you might take out a payday loan to cover an unexpected bill, to pay for emergency repairs to your home, vehicle or household appliance. In any of these cases, you could apply for your loan and get money paid into your bank account on the same day.
We can help you to find a lender who offers guarantor loans bad credit with an instant decision. Lenders we work with will consider your circumstances along with your past credit history. It takes just minutes to apply and the whole loan application is undertaken online. Apply today to find out how much you might be able to borrow.