Guarantor loans may be easier to find approval for than other types of loans but they usually come with high rates of interest. So it is possible to find guarantor loans low APR and if so where?
What Is A Guarantor Loan?
A guarantor loan is a type of loan that people with poor credit ratings find easier to be approved for than other types of loans. However, it is not all good news as the interest rates on this type of loan is usually higher than with others.
You may be able to borrow up to £5,000 with a guarantor loan and spread the repayments out over 36 months.
People with poor credit ratings are generally targeted with higher interest rates to start with when compared to people with good credit ratings. This can make finding a loan with an affordable rate of interest extremely difficult.
The guarantor loan is popular among people with low credit ratings because they ask someone to stand as a guarantor. This means the person is willing to take over the loan repayments if you find you cannot make them. As you are putting such an onus on a third party, the guarantor needs to be someone you know very well. They could be a good friend or relative, but cannot be a spouse or partner.
The downside to the guarantor loan is that friendships and relationships can be strained. Bear in mind:
- You have to feel comfortable enough to talk to a friend or relative about your financial situation;
- The person may not really want to stand as guarantor but they do not want to offend you. Therefore tension could be created between you;
- You might not have someone close enough to you that you can ask to be a guarantor;
- The person who is standing guarantor is putting their credit rating at risk by signing up with you for the loan;
- With a poor credit rating, you are not going to get the cheapest APRs on the market;
- If you only need a small loan, you might be better off considering a short-term or payday loan.
Can I Get Guarantor Loans Low APR?
The APR is based on how big a risk the lender sees you, generally the lower your credit rating the higher the APR. The APR is the annual percentage rate, the amount of interest applied to the amount you borrow over the period of time you borrow.
The amount of interest is calculated based on several factors, including the amount you are borrowing, how long you take the loan over and your credit rating.
If you were to spread out the loan over 1 year, you would pay less in interest than on a loan you take out over 36 months. Of course, the monthly repayments would be higher than if you had spread the loan over longer so you are going to have to find a fine line between keeping the interest down and being able to afford the monthly repayments over the term.
While you are never going to get the most attractive rates of interest if you apply for your loan with our help you will get access to some of the most competitive rates based on your credit rating.
We work alongside a panel of UK lenders who consider verifiable income and who offer affordable loans. You do have to make sure that you are eligible to apply for a loan and when considering a guarantor loan both you and the person standing as guarantor needs to be eligible.
To apply for a loan you both need to:
- Be at least 18 years old;
- Be a resident of the UK;
- Have a regular income;
- Hold a bank account and debit card;
- Be able to set up a direct debit for the repayments.
How to Apply For Guarantor Loans Online
To stand the best possible chance of obtaining guarantor loans low APR you can apply for your loan with our help.
To apply for your loan make sure both yourself and the person standing as guarantor is eligible by checking the requirements above.
Also, make sure that you both know the terms of a guarantor loan and the guarantor knows the part they will have to play in the loan agreement if you find you cannot meet the repayments.
Once you have done so you can give us your details and those of your guarantor. The lenders we work alongside offer an instant decision and the loan can usually be undertaken online without the need to wait for paperwork.
If we can match you with a lender, you can check out the details of the loan, go ahead, and sign up if all is well.
Other Types of Loan You Might Consider
Depending on how much you want to borrow you might want to give some thought to the alternatives to guarantor loans.
People with poor credit ratings often apply for short-term or payday loans if they only require a small amount of money and they can repay the loan quickly.
With a payday loan, you could borrow between £100 and £500. Even with a poor credit rating, you might be accepted as the amount of money is classed as being small. You would either repay the loan on your next payday or spread it out over three paydays, assuming you are paid every month. The best part is you do not need a guarantor to sign up for the loan with you.
A short-term loan might offer up to £1,000 and the loan repayments might be spread out for up to 12 months. Again, you do not need a guarantor to apply for this type of loan and you can apply even if your credit rating is not perfect.
If you decide you need to look for guarantor loans low APR then apply with our help to get access to lenders offering the lowest rates of interest.