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How Do Guarantor Loans Work?

Guarantor loans require an individual or representative to co-sign the terms of your financial agreement.

Simply put, you are now able to obtain the monetary amount you need even if you cannot acquire the credit in your sole name. A form of unsecured loan, your guarantor, acts as a ‘guarantee’ to ensure that payments will continue being made if you must default them.

Typically, the guarantor tends to have a better credit-rating history than the individual needing the loan. As the guarantor essentially signs on behalf of your reliability and trustworthiness to commit to payments, as well as their credit-rating as back up, companies are more likely to lend to you. These types of loans allow you to borrow from £1,000 to £7,500 over a period of 1 to 5 years. (Citizens Advice Bureau).

Guarantor loans can be used to finance anything including events, home refurbishing, a car, a much-needed holiday or any other purpose you may see fit.

Interest Rate and APR

The interest rate you will be subjected to pay depends upon your credit rating and which lender you select. Your Guarantor loan may vary based upon numerous factors such as credit rating, employment history, etc.

However, the standard APR for guarantor loans is around 50%. Which in contrast to other financial products such as payday loans and other bad credit loans, is not as expensive in comparison. The fixed-rates for guarantor loans are better than other investments which are designed for individuals with poor credit rating, meaning this is an extremely viable and beneficial solution.

Applying for a Guarantor Loan

guarantor loans process

 The borrower

To apply for a loan, you must be at least 18 years old, a UK citizen and hold a UK bank account in your name.

Majority of guarantors maintain a close relationship with the individual needing the loan. Many individuals seek family members, trusted friends, etc. to help assist them with these loans. A guarantor must provide the same information as the borrower, for example, providing credit-rating history, employment transcripts, or bank statements to solidify their ability to act on your behalf.

The guarantor

Guarantors may be a homeowner, a tenant, living with parents or friends and must be at least 18 years old. The guarantor cannot be financially linked to the borrower, for example, spouses.

Becoming a guarantor is a big responsibility and should be considered carefully before entering a financial agreement. The Citizen’s Advice Bureau advises anyone interested in becoming a guarantor to ask themselves why does the borrower need a guarantor, is the borrower responsible and is the loan a smart decision?

It is best to seek legal advice before agreeing to be a guarantor.

Who benefits from a Guarantor Loan?

Guarantor loans are primarily targeted at individuals with poor credit ratings and can be extremely beneficial for someone who needs funds but does not have the appropriate means to obtain what they need. For example, a less than perfect credit rating or minimal credit history.

One of the significant advantages of choosing a Guarantor loan is that your application or request tends to be viewed as less risky by any possible lenders or business’ as you have a third-party to help assist with the finances.

The fall-back of a Guarantor to appease payments if anything were to happen, allows lenders more flexibility in offering a loan. Plus, you can borrow a higher amount than you would be typically be provided with poor credit.

Another advantage is that this type of loans offers individuals the opportunity to rebuild their credit-rating by keeping up the payments. Meaning in the future you will have a higher chance of obtaining a regular loan on your own merit.

There are several types of financial products available to help you in whatever situation you may be. However, it is essential to find the appropriate one which represents your needs and is in accordance with your financial status at the time. If you have a less-than-perfect credit rating and have been previously rejected, we can scour the open-web market and also contact a number of available lenders from our panel to find the perfect arrangement for you.

Guarantor loans are perfect if you are needing access to funds but are unable to through variables such as your credit history. This type of loan provides an additional layer of security to the lender which enables you with advantages to receiving financial guidance like everyone else. For those with limited resources, Guarantor loans can be lifesavers and help in times of need.

Applying for a Guarantor Loan with BadCreditSite™

If you are interested in a Guarantor loan, it only takes 2-minutes to complete our online form, and we will find the best agreement for you individually. We are an FCA-authorised limited company and details can be found on our contact page. BadCreditSite™ wish to encourage everyone to ensure the business they are choosing to be financially involved with are legitimate. Click here to apply online.

CreditPoor does not charge any fees. If you are contacted by anyone saying they are calling from CreditPoor requesting you make them a payment you should contact the Financial Conduct Authority (FCA) as we are aware that there is currently a scam using the CreditPoor brand. This has nothing to do with our company.