With all of the different loans available to you, it can be difficult to decide which is right for you. Many people overlook the words “guarantor loan” when they are searching for short-term finance.
Unfortunately, this can be a big mistake. That’s why, in this article, the Best Unsecured Loans team explain what a guarantor loan is, who might want to take one out, and what the alternatives are.
What is a guarantor?
Sometimes when you take out a loan, you will be asked to provide a lender with a guarantor. This is a person who accepts the responsibility of paying off the loan in the event that you cannot. Many lenders won’t accept an application for a loan if you don’t provide them with a guarantor because they won’t have another person to chase for any outstanding amount if you default.
Both you and your guarantor will have to have credit checks carried out on you. The credit checks will look at:
- how much debt you’re both in now
- how well you’ve been paying your bills off – on time and in full?
- do either of you have any County Court Judgements?
- both of your employers, both of your job titles, and how long you’ve been with your employer
- how much both of you spend every month.
You and your guarantor will go through a detailed questionnaire and you’ll both have credit checks run on you.
Why do some people choose guarantor loans?
Some people choose guarantor loans because they’re very concerned that they won’t be able to take out a loan without a guarantor.
A lot of this fear comes from a misunderstanding of how lenders work. There are three types of lender:
- those who want to deal with people with a good credit score
- those who want to deal with people with a bad credit score
- those who want to deal with people with a bad credit score but they want someone with a good credit score to chase for the money if the person taking out the loan can’t make their repayments.
BestUnsecuredLoans does not introduce our borrowers to guarantor loans because we think that they’re unfair. And this is why…
What are the downsides to guarantor loans?
Many people who take out a guarantor loan do not fully appreciate how much responsibility that their guarantor has. If you cannot repay the loan through your own means, the responsibility for the loan falls entirely on the shoulders of your guarantor.
This can cause substantial problems that you and your guarantor need to be aware of:
- your guarantor might not be able to pay back the loan because of a change in their personal circumstances, or
- the guarantor might have not expected you to default on their loan and receiving a letter of demand to pay from the guarantor loan company will cause serious harm to your relationship with that person.
When is it better to take a non-guarantor loan?
In almost every situation, you will be able to find a non-guarantor loan. No matter what your credit score looks like or how long you need to be able to repay the loan, there are non-guarantor options available to you.
This means that you won’t be forced into a situation where you need a guarantor loan. For these reasons, taking out a non-guarantor loan is always our preferred option. Whether you need a Christmas loan or a home improvement loan, a you should always choose a non-guarantor loan.
What loans are available without a guarantor?
There are many different kinds of loans that you can take out without the need to provide a guarantor including:
If you are in need of finance urgently, then emergency loans are your best option. They don’t require you to have a guarantor and you can expect to see the money in your account within a few hours of your application being approved.
Home improvement loans
If your home need some work doing to it and you do not want to pay the money available right now to pay for it, then you can get a non-guarantor home improvement loan. This will allow you to pay for any work and materials that you need for your home while you pay it off over a longer period of time.
If you just need a little bit more cash in hand before your next payday, then these loans are also an option for you to consider. Payday loans can be easily accessed without a guarantor and you make a single repayment the next time you are due to be paid.
Find your next no-guarantor loan with Best Unsecured Loans
BestUnsecuredLoans are here to find the right lender for you – no guarantor required. Apart from guarantor loans being unfair, they’re also not protected by the Financial Conduct Authority’s “fair play” guidelines covering payday loans and short term loans.
If you want to borrow money but don’t want to risk a valuable relationship with a friend or a family member, apply through us. Our computer system takes all the details you provide us with together with your credit report and matches you with a lender who wants to work with you.
The whole process takes seconds and the money could be in your account within the hour. You are under no obligation to accept any quote we provide you with. If you do, you’ll have a direct relationship with the lender we introduce you to and you’ll make your repayments to them.
To start your application, please click here.