Need extra funds to get rid of past credit issues? A guarantor loan could be the solution that you can secure to borrow funds with the help of a trusted friend or family member supporting your loan application.
Confronting a financial emergency while already having a bad credit history can be a daunting task. Traditional lenders often hesitate to support, but Arbitrageloans, through its loans with a guarantor in the UK, brings different prospects.
You can borrow the required amount by involving a family member or friend to back your application. Once approved, you can use the funds to consolidate debts, manage regular or irregular expenses, or cover unexpected renovations.
A guarantor loan is a type of personal loan that requires another person to sign the loan agreement with you as your guarantor. This person is like a safety net for the loan providers.
If the primary borrower, like you, is unable to make the loan repayments, the guarantor takes on the legal responsibility to cover the pending monthly repayments. It significantly minimises the lender’s risk, and you may get a chance to borrow with low credit scores, defaults or minimum credit history.
These guarantor personal loans function on the partnership and trust with your guarantor. Therefore, these are tailored to bridge the gap between the financial requirements and affordability.
To get a loan with a guarantor, choosing the right person is perhaps the most vital step of the process. Generally, we prefer a person with a strong financial background, as this boosts your loan approval chances.
A suitable guarantor can be:
The loan process is intended to be simple, often aiming at a fast approval decision and easy accessibility. You need to follow these steps:
Fill out the loan application and provide your personal details and the guarantor’s contact information.
We contact your guarantor to confirm whether they are familiar with all legal responsibilities.
We do a credit check of both the primary borrower and the guarantor. It is useful in covering the loan if you default.
Once approved, you and the guarantor sign the agreement. Funds are transferred within 24 hours.
Both the borrower and the guarantor must fulfil particular criteria to qualify for the loans. The criteria keep the consistency of the responsible lending.
For the primary borrower:
For the loan guarantor:
For a lender, providing a loan to someone with a bad credit profile is a huge risk. It is where guarantor loans for bad credit can be like a “credit enhancer”. Introducing a guarantor means you are convincing the lender that you have a secondary but more stable repayment source.
Before the guarantor, the lender’s concern is:
“Will this borrower repay the loan?”
After the guarantor’s involvement, that risk shifts to:
“If the primary borrower doesn’t, then will the guarantor be capable of making loan repayments?”
This ultimate shift allows lenders to give acceptance to the applicants who traditional lenders have rejected.
Getting approval on loans with a guarantor from a direct lender brings multiple benefits in your favour. The most prominent ones are:
A loan with a guarantor is generally aimed at smaller or slightly higher funding requirements. However, the amount limit is lower than a guarantor mortgage loan. Moreover, the amount may also vary according to the individual risk factor.
Typically, the figures remain around:
*An important note: You need to have a guarantor who is a homeowner to obtain larger amounts. Lenders consider property ownership as the guarantee of the loan repayment.
Loans with low APR when a guarantor is there can be a possibility in the UK loan market. Lenders are at minimum risk because the guarantor is involved. Therefore, alternative lenders keep the interest rates on the lower side.
Still, you need to do these things to get the best rates:
Loan Type |
Typical APR Range |
Best For |
| Guarantor Loan | 35% - 50% | Bad credit or No credit history |
| No Guarantor Loans for Bad Credit | 50% - 1500%+ | Emergency cash but expensive |
* These are just examples and for illustrative purposes only. Actual rates vary among individuals and their financial circumstances, and affordability.
When seeking the best guarantor loans in the UK, direct lenders are often useful compared to using a broker. As a result, approaching Arbitrageloans is beneficial because:
