Guarantor Loans

As the term suggests, guarantor loans are a type of bad credit loans wherein a third person, known as the “guarantor”, is required to co-sign the loan. Basically, the responsibility of the guarantor is to assure that the borrower will meet the repayments, and will repay the loan on the borrower’s behalf if the latter fails to pay.
Bad credit borrowers are able to secure the money they need with the help of a guarantor, because it is the guarantor’s credit which is taken into consideration. Basically, the guarantor loan system revolves around the concept that if your guarantor trusts you enough to co-sign your loan, the lender should gain confidence that you will indeed, stick to your end of the deal. Thus, to get approved for a guarantor loan, your guarantor must be in good credit standing, a resident in UK, and must have a debit card and bank account from where payments will be taken if you fail to pay. Some lenders may also require that the guarantor be a UK homeowner, although a guarantor loan is not considered a secured loan.
Guarantor Loan Advantages

  • Easy application, which is done online.
  • Freedom to use the money in any way you like.
  • Few paperwork and easy requirements.
  • No credit checks on your part (credit checks are performed on the guarantor)
  • Money is available within a few hours.
  • There’s a chance to repair your credit over time, as you make your repayments in a timely manner.
  • Quite competitive APRs
  • Flexible repayment options.
  • No collateral needed.
  • Can be repaid over a few years just like a traditional personal loan.

Guarantor Loan Disadvantages

  • It’s not easy to find a guarantor.
  • The guarantor should have good credit score and must undergo credit checks.
  • The guarantor is sometimes required to be a homeowner.
  • Your guarantor will suffer if you fail to hold to your end of the bargain, which could be a source of quarrels.