Introduction
Whether you’re applying for a loan, mortgage, credit card or current account it’s important that you fully understand the application process and indeed the terms involved.
You’re probably reading this due to the fact that you’re either searching for information about guarantor loans or you’re preparing to apply for a guarantor loan. Whatever your current situation, we think this article will prove helpful to you going forward.
We’re going to outline 6 of the top guarantor loan related terms and discuss what these mean and when they might be used during the application process.
1. APR
Prior to even applying it’s likely that you’ll see the term APR on a company’s website. APR stands for Annual Percentage Rate and will be expressed as a percentage of the total yearly interest rate. The best rate loans will be around the 5% mark, guarantor loans will be around 50% and payday loans will be around 2000% APR.
2. Bad Credit Loan
Guarantor loans are often described as a type of bad credit loan. This basically means that guarantor lenders may be able to accept those with a bad credit history, i.e. those who have missed payment and defaulted on credit commitments in the past.
3. Debt Consolidation
One of the most popular uses for guarantor loans is debt consolidation. Debt consolidation is the act of using a single item of credit (such as a credit card or loan) to pay off multiple items of credit. Consolidating debt into one single monthly repayment is a great way of getting your finances organised and more manageable.
4. Guarantor
One of the conditions of guarantor loans is that the applicant must provide a friend or family member to stand as guarantor. The guarantor simply supports the application and guarantees to pay the monthly repayment should the borrower ever fail to do so.
5. Supporting Documents
Occasionally during the guarantor loan process, lenders will ask you to provide some supporting documents. Often, the automated ID, address or income validation checks will fail to return conclusive results meaning the lender will require you to provide documents to support the application. This could include proof of ID (a passport or driving license), proof of address (a recent utility bill) or proof of income (a bank statement or payslip).
6. Underwriting
If you do decide to go ahead and make an application for a guarantor loan then one term you may come across is underwriting. This is basically the term used to describe the processing over the loan application. Underwriting checks that may be used during the process include: affordability checks, credit checks, income validation checks, job checks and security checks. Providing you pass the underwriting checks then there’s a good chance you’ll be approved for the loan.
Conclusion
Understanding exactly what these terms mean will make the application a much simpler process. Going forward we are keen to publish more of these types of articles so if you’d like to see any particular terms added don’t hesitate to put us a comment in the section below.
Whether you’re applying for a loan, mortgage, credit card or current account it’s important that you fully understand the application process and indeed the terms involved.
You’re probably reading this due to the fact that you’re either searching for information about guarantor loans or you’re preparing to apply for a guarantor loan. Whatever your current situation, we think this article will prove helpful to you going forward.
We’re going to outline 6 of the top guarantor loan related terms and discuss what these mean and when they might be used during the application process.
1. APR
Prior to even applying it’s likely that you’ll see the term APR on a company’s website. APR stands for Annual Percentage Rate and will be expressed as a percentage of the total yearly interest rate. The best rate loans will be around the 5% mark, guarantor loans will be around 50% and payday loans will be around 2000% APR.
2. Bad Credit Loan
Guarantor loans are often described as a type of bad credit loan. This basically means that guarantor lenders may be able to accept those with a bad credit history, i.e. those who have missed payment and defaulted on credit commitments in the past.
3. Debt Consolidation
One of the most popular uses for guarantor loans is debt consolidation. Debt consolidation is the act of using a single item of credit (such as a credit card or loan) to pay off multiple items of credit. Consolidating debt into one single monthly repayment is a great way of getting your finances organised and more manageable.
4. Guarantor
One of the conditions of guarantor loans is that the applicant must provide a friend or family member to stand as guarantor. The guarantor simply supports the application and guarantees to pay the monthly repayment should the borrower ever fail to do so.
5. Supporting Documents
Occasionally during the guarantor loan process, lenders will ask you to provide some supporting documents. Often, the automated ID, address or income validation checks will fail to return conclusive results meaning the lender will require you to provide documents to support the application. This could include proof of ID (a passport or driving license), proof of address (a recent utility bill) or proof of income (a bank statement or payslip).
6. Underwriting
If you do decide to go ahead and make an application for a guarantor loan then one term you may come across is underwriting. This is basically the term used to describe the processing over the loan application. Underwriting checks that may be used during the process include: affordability checks, credit checks, income validation checks, job checks and security checks. Providing you pass the underwriting checks then there’s a good chance you’ll be approved for the loan.
Conclusion
Understanding exactly what these terms mean will make the application a much simpler process. Going forward we are keen to publish more of these types of articles so if you’d like to see any particular terms added don’t hesitate to put us a comment in the section below.