Anyone with poor credit who has tried to apply for a loan may have found that obtaining credit is difficult. There are many different types of loans on the market but one loan that people with a poor credit rating might be approved for easier than others is a guarantor loan. However, what does guarantor loans bad credit entail?
Requirements for Guarantor Loans
In order to be allowed to apply for a guarantor loan, you do have to meet the same requirements as with any other loan. These include:
- You are over the age of 18;
- Holding a UK bank account with a debit card;
- Have the ability to set up direct debits through the bank account;
- Have a regular income.
One Big Requirement Difference to Guarantor Loans
There is one requirement needed for a guarantor loan that is not needed with loans such as short-term, payday and personal loans. This is that you need to find a good friend or relative (not your spouse or partner), who will agree to stand as your guarantor.
This means that the person is essentially saying that if you fail to make the monthly loan repayments they will take them over and pay the loan until it is paid off.
The person who is going to stand as your guarantor will need to have a good credit rating, be over 18, live in the UK, have a regular income and meet all the other requirements for eligibility.
Applications for guarantor loans have increased, with balances on loans reaching almost £1 billion, with the majority of applicants being people with a less than perfect credit score.
Considerations before Applying For Guarantor Loans Bad Credit
A guarantor loan may sound like the answer to your dreams if you have been turned away for credit in the past. However, some considerations need to be taken into account.
- Do you want to open up to a close friend or relative and tell your financial situation is not too good?
- Is asking someone to stand as guarantor going to change your friendship or relationship and put stress or strain on it?
- Does the person who you are asking understand what is requested of them? They will have to repay the loan if you don’t
- Does the guarantor have a satisfactory credit rating?
- Does the guarantor realise standing as a guarantor could affect their credit file negatively?
- Are your circumstances or the circumstances of the guarantor going to change anytime in the near future?
- Have you considered alternative options for finding a loan for bad credit?
Benefits to a Guarantor Loan
If you have talked all of the above over with someone who is willing to stand as a guarantor and have decided that this is the type of loan you want to apply for, there are some benefits to a guarantor loan.
The biggest benefit of applying for a guarantor loan is that there is more chance of the lender agreeing to give you a loan as you have someone guaranteeing the repayments.
With our lenders, you might be in a position to borrow up to £5,000 with a guarantor loan and spread the cost of the repayments out for up to 36 months. The term and amount offered are going to depend on the terms and conditions of the lender of course.
Applying For a Guarantor Loan Online
One of the easiest ways to apply for a guarantor loan is online, with both parties, you and your guarantor, being able to undertake the entire application online without the need for paperwork.
When applying for a loan with our help you can choose the amount you want to borrow, up to a limit, and the term you want to pay the loan back over.
Give us your personal information, which is going to include your bank account and debit card number, along with that of the person who is going to stand as your guarantor.
We will search among our panel of lenders to try to find a lender who will offer you the loan based on the terms you want. If one of the lenders turns you down, we simply move onto the next lender on our panel.
When we have found you a match you can check over the details of the loan and if you are happy, go ahead and sign up. The money from the loan is then paid into your bank account and you can spend it on whatever you want.
Applying for guarantor loans bad credit has never been as easy or fast.