Due to multiple financial requirements, you will eventually need a loan. However, to qualify for a loan, you must meet some basic parameters. These include a good credit score, strong repayment capacity, and regular earnings.
You are a risky borrower if you don't have a strong repayment capacity or a poor or limited credit history. In that case, you can take a loan with a guarantor through a guarantor loan. Also, flexibility in the rate of interest is available. This loan provides you with funds for instant approval decisions.
If you have a guarantor who can guarantee your repayments, borrowing funds is hassle-free. ArbitrageLoans is an online lending company That provides funds with a higher approval rate guarantee. Once you prove repayment capacity, the process for guarantor loans in the UK from direct lenders is straightforward.
Loans with a guarantor are a type of loan where you can raise funds with the help of a guarantor. An amount is approved for loan approval by combining your payment capacity with the guarantor.
Who can be a guarantor?
A guarantor is the second borrower who agrees to pay off the loan if the first borrower fails to do so.
In other words, if you default as a primary borrower, your guarantor is liable to make the repayments. On this basis, your rate of interest and monthly instalments are decided.
You can raise funds online by applying for a larger amount at a low interest rate through guarantor personal loans. This happens due to the support of the guarantor.
Frequent doubts about GUARANTOR LOANS
| Can a borrower take our multiple guarantor loans? | What happens if the guarantor dies? |
|---|---|
| Yes, but that can cause financial strain on guarantors as well as the borrower. Delayed or skipped repayments affect credit rating for both of them | In that case, the borrower may need to find a new guarantor. Else, a discussion with the lender is vital to resolve the issue. |
| How long do I have to repay a guarantor loan? | Can I have more than one guarantor? |
| The loan duration can span from one year to five year. The factors like loan amount and lender's policy matter. | Some lenders allow you to have more than one guarantor. But this is not a common culture and lender is the final decision-maker. |
Guarantor loans online work on the rule of joint repayment capacity. The amount is approved considering your and your guarantor's creditworthiness. This has three essential aspects: the primary borrower, the guarantor, and the lender.
You and your guarantor must provide your financial documents. These documents are proof of regular earnings, such as salary slips. You can also provide a record of the salary deposited to the bank. Apart from this, it is vital to provide a six-month bank statement along with permission for a credit check. Providing proof of residency is vital, too.
All these financial details are verified online, and the loan amount is approved. One thing is worth noting here: The guarantor must have a good credit rating. That is crucial to seeking approval and low-interest guarantor loans. This loan is mostly useful for borrowers with an adverse credit history or limited credit history.
With the help of a guarantor, it is easy to get approval on a desired loan amount. However, the final decision is still made after verifying all the financial details. After loan approval, a loan agreement is sent online to you and the guarantor.
Once the guarantor and the borrower consent, the loan amount is disbursed to the account of the primary borrower. The loan agreement has all the terms and conditions, including the repayment schedule.
Yes, it is possible, especially if you are applying for guarantor loans for bad credit from a direct lender. Guarantor loans primarily aim to help borrowers with poor or limited credit history.
Millions of people across the UK use a guarantor loan to fulfil their financial requirements. This clearly shows that this loan is quite useful. Let us know the benefits this loan offers.
Whenever you borrow a loan, there are some precautions attached to it. You must keep a few things in mind for safe borrowing in case of these loans. Let's know those facts which you need to take care of.
Don’t put your relationships at risk
In guarantor loans, one of your relatives usually becomes your guarantor. If you default, your relative is responsible for repaying the loan. In such a case, borrow funds according to your repayment capacity. Otherwise, it can spoil your relationship.
It can impact credit scores
Late or skipped payments can affect your and your guarantor's credit scores. Not only you, but your guarantor may also face financial difficulties. This will have a negative effect on your eligibility, which can thoroughly affect your capacity to avail of varied financial products.
Debt accumulation may happen
If you do not repay the loan properly, there can be legal action against you and the guarantor. Else, both of you may have to face debt accumulation. In that case, your and your guarantor's financial records will be negatively affected.
Late fees may apply
Guarantor loans are affordable. Still, if you show any carelessness in repayments, a late fee may apply. However, not all lenders, like us, charge a late fee. If you make late repayments multiple times, a late fee is also applied according to lending rules.
Doubts are clear now that guarantor loans are dependable for any financial condition. Also, you can understand what is a guarantor and its importance. Besides, applying for them from a direct lender like ArbitrageLoans is even more beneficial due to the speedy process. Despite the support of the guarantor, you borrow responsibly. After all, not every time in the future can you depend on a loan with a guarantor. You must have a strong repayment capacity individually, too.
Guarantors can be involved in personal loans, bad credit loans, student loans, small business loans, etc. Any loan where the borrower has a poor repayment capacity can be availed with a guarantor. However, if you are applying specifically for no guarantor loans, the guarantor cannot be part of it.
The rate of interest for guarantor loans starts from 34%, but this is the minimum. The actual rate of interest varies depending on the applicant's repayment capacity. The lending policy of the loan company is the most vital and conclusive factor. You should always compare loan offers before applying. Also, check your repayment capacity using a loan calculator.
Yes, credit checks are vital steps in the loan process. Both the borrower and the guarantor must undergo a credit check. Only then can we decide the exact amount a loan applicant qualifies for. After all, this loan depends more on the guarantor's repayment capacity. Therefore, the guarantor has to agree to the credit check.
If the borrower passes away, the guarantor must pay off the entire loan amount. Conditions can be different if the loan agreement has any other thing mentioned in the loan agreement. Rationally, a guarantor loan depends more on the creditworthiness of the guarantor. It is why, if the borrower dies, the guarantor must pay off the funds.
No, a guarantor can never be removed from loans with a guarantor. You cannot remove a guarantor until the entire loan is paid off. However, if the same loan is refinanced with another guarantor, the previous guarantor can be removed. But this, too, is subject to the lender's terms and conditions.
