What Is A Guarantor Loan?
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What Is A Guarantor Loan?

The recent increased popularity of guarantor loans in the UK is mainly because tenants and non-homeowners with credit problems, are finding it difficult to arrange finance withoutVCD311 a guarantor. This is as a result of the credit crunch and the fact that the lenders have all tightened their lending criteria, especially if there is a history of poor credit.
What is a Guarantor Loan?
A guarantor loan is a form of unsecured loan where an agreement is made between a third party and the Lender that ensures that the loan will be repaid, should the borrower be unable to meet the repayments. The agreement is enforceable by law.
Who Are They Best Suited To?
Because the loan is not secured against a property or car or anything else, guarantor loans are particularly suited to anyone over 18 years of age but particularly:-
Non-homeowners, whether private tenants or local authority
Students or people living at home with family or with relatives
Homeowners with little or no equity in their property
People with a poor credit record or have been refused credit elsewhere
Will a Bad Credit History Affect Me?
No. With a guarantor loan, there is no credit check carried out on the applicant, but one is carried out on the guarantor, therefore the guarantor needs to be a homeowner with a healthy credit record. Having a porr credit history will not necessarily preclude you from taking out a guarantor loan. However, if you are bankrupt or in a debt management or IVA plan, you will not be able to get a loan.
How Much Can You Borrow?
With a guarantor loan you can borrow up to 5,000 depending on individual circumstances, over a period of 48 months (4 years)
Who Can Act as a Guarantor?
Anyone can act as a guarantor, but they must be a homeowner and have a good credit history. The guarantor is not linked to the loan so the debt does not stand as a debt against their name, nor does it affect them in VDCD410obtaining credit in the future.
A guarantor can be a member of your family (other than spouse), a work colleague, a friend or anyone else that is will to assist you in getting a loan. The prospective guarantor will be more confident to sign as guarantor if the debtor (the one borrowing the money) were to sign an indemnity. An indemnity is a legal binding contract between the borrower and the guarantor that states that should the guarantor be asked to pay back the loan, the debtor will repay the guarantor.
How Long Does it Take To Get My Loan?
The time it takes will be dependent on how long you take to provide all the relevant documentation. Once the lender receives the required paperwork back from you, it will take around 3 - 5 days for you to receive the loan.
In Summary
A guarantor loan can be useful if you need to arrange finance and you have a bad credit history. However before you sign the paper work I10-002you should make sure that you fully understand what you are getting yourself into. It is an expensive way to borrow money, and if you are unable to maintain the payments your guarantor will be required to pay the loan back on your behalf.