Guarantor loans are, at the moment, one of the most accessible ways to get credit if you have a poor credit history. Since the recession, the banks have been wary about lending to people who don’t have a great history of borrowing, so even customers who haven’t borrowed before but who are extremely responsible may be turned down. Guarantor loans allow you to add another level of security to your borrowing, by getting a friend or relative on board to pay your loan if you default on the monthly repayments.
Of course, missing loan payments is not something that you want to do and most of us would be horrified at the thought, but unfortunately sometimes circumstances beyond our control cause it to happen. In this case, the lender should try to work with the person who took the loan first, before going to the guarantor. These types of loans can work very well for the right person, but there are some circumstances where you shouldn’t
Applying on a whim
If you’ve just seen a holiday that you’d like to go on at a really good deal online or if you’ve suddenly decided that a new car would be a good idea, then great. However, applying for a guarantor loan straight away online may not be advisable, as big purchases like this should be carefully thought through first. Entering into a major decision like borrowing money and paying it back over a number of years should be considered carefully before you jump in with both feet. If you’re riding on a high of excitement then you may not always make the most sensible decisions.
When your guarantor isn’t right
Choosing a guarantor is pretty easy for most, but when you know deep down that your chosen guarantor doesn’t really have their heart in it, or if they don’t really meet the lending criteria then you should avoid using them to support your loan. Lying on an application will never end well, so if they don’t meet the requirements, then you will need to rethink your choice.
Taking on a loan for the wrong reasons
If you want a guarantor loan for gambling reasons or for something illegal, then you may be digging yourself into a very deep hole. Obviously, a lender will not lend to you if they suspect the loan may be used for either of these reasons, so again, lying on the application is a big no-no. You should only borrow money if it directly benefits you. Remember that you are liable to pay it all back.
Can you really afford to borrow?
Good guarantor lenders will go through your income and expenses with you in order to work out if you’re able to comfortably afford the loan or not. This is a really useful part of the application, as it can help you to feel comfortable in the fact that you’re able to cope with the loan repayments. If you know that your expenses will be more than they appear yet you take out the loan anyway, you could be getting yourself into a lot of trouble, financially speaking.
Of course, missing loan payments is not something that you want to do and most of us would be horrified at the thought, but unfortunately sometimes circumstances beyond our control cause it to happen. In this case, the lender should try to work with the person who took the loan first, before going to the guarantor. These types of loans can work very well for the right person, but there are some circumstances where you shouldn’t
Applying on a whim
If you’ve just seen a holiday that you’d like to go on at a really good deal online or if you’ve suddenly decided that a new car would be a good idea, then great. However, applying for a guarantor loan straight away online may not be advisable, as big purchases like this should be carefully thought through first. Entering into a major decision like borrowing money and paying it back over a number of years should be considered carefully before you jump in with both feet. If you’re riding on a high of excitement then you may not always make the most sensible decisions.
When your guarantor isn’t right
Choosing a guarantor is pretty easy for most, but when you know deep down that your chosen guarantor doesn’t really have their heart in it, or if they don’t really meet the lending criteria then you should avoid using them to support your loan. Lying on an application will never end well, so if they don’t meet the requirements, then you will need to rethink your choice.
Taking on a loan for the wrong reasons
If you want a guarantor loan for gambling reasons or for something illegal, then you may be digging yourself into a very deep hole. Obviously, a lender will not lend to you if they suspect the loan may be used for either of these reasons, so again, lying on the application is a big no-no. You should only borrow money if it directly benefits you. Remember that you are liable to pay it all back.
Can you really afford to borrow?
Good guarantor lenders will go through your income and expenses with you in order to work out if you’re able to comfortably afford the loan or not. This is a really useful part of the application, as it can help you to feel comfortable in the fact that you’re able to cope with the loan repayments. If you know that your expenses will be more than they appear yet you take out the loan anyway, you could be getting yourself into a lot of trouble, financially speaking.