Guarantor Loans, do they work?
Simply put, yes guarantor loans do indeed work. To fully understand this you first need to learn what a guarantor loan is. This counts doubly if you are volunteering to be a guarantor for someone's loan. If you do not fully know what you are getting yourself into then you are very likely to get upset should the borrower struggle to make payments. You can find out more about guarantor loans.
What does being a Guarantor mean?
A guarantor loan represents a contract between the lender, the borrow, and the guarantor. The guarantor does nothing until there is a breach of loan agreement by the borrower. In this case the guarantor becomes responsible for the loan and must repay it or risk losing their home. The loan is trully one of the last options for those people who have been refused loans through the normal high street channels like banks and building societies and other lenders. The guarantorm loan is perfect fot those people who:
- have a Bad Credit History or No Credit History
- are Unemployed, or claiming benefits
- are Students
You see the big winning factor of guarantor loans is that there is no credit check for the borrower, rather it is the guarantor who faces the scrutiny. The other differences from your normal everyday loans are that the borrower does not need security against the loan, in effect the guarantor is the security. So, if the borrower fails to repay, then the guarantor has to, and if the guarantor can't then their house is at risk. For this reason it is absolutely critical that the guarantor understands what the loan is, the real facts and figures as if the loan was their own before signing anything and it's up to the borrower to help educate the guarantor.
Loans for the unemployed and those claiming benefit
Loans for the unemployed are pretty few and far between for obvious reasons but with a guarantor even the unemployed and people claiming state benefits can get credit. Quite often you will find the guarantor would love to lend the money to the out of work person but simply does not have the disposable cash there and then to lend it, so acting as a guarantor is the next best thing.
