You can shop on the internet for almost anything these days and the same goes for loans, in fact if you were to type in loans, you would find pages upon pages of companies offering various types of loans. Every individual and their financial situation is different this can make the world of difference when it comes to choosing the right loan for you.
People who have never borrowed money before can find it difficult to obtain a loan, even if they are earning a decent wage and have been in long term employment. This is because they have no credit history. Banks will find that individual's with no credit history are too much of a high risk to invest in. The reason for this is they are hard to assess and know whether they will be good at paying the money back.
The growing number of individuals with bad credit can also find that there are limited options available to them. Banks will be weary of their adverse credit history and with the new stringent laws that are now in place it is even harder for people to obtain loans. There are solutions for people in these situations and one of them is with a guarantor loan.
To obtain a guarantor loan you would need to ask somebody who is willing to act as a guarantor for the loan. This person can be anybody, a family member, close friend or even a work colleague as long as they have a good credit history.
It is a huge risk for a person to act as a guarantor for a loan and they must fully understand the role they are taking on. The guarantor must appreciate that if the borrower fails to pay back the loan, the responsibility falls back on the guarantor to pay the loan in full. It would be advisable for the guarantor to get as much information from the borrower as possible for example: The guarantor should insist on having assess to the borrower's personal details, bank account earnings and outgoings, this way he can make a judgement on whether the borrower can afford to obtain the loan.
The guarantor loan is an unsecured loan and many people make the mistake of thinking it will be a lot more expensive than other unsecured loans, this is not necessarily true as the loan is based on the guarantor's good credit history not the applicant who is applying for the loan. The loan can help to rebuild the borrower's credit by using the guarantor's good credit standing.
The common concern among guarantors is losing their property if the borrower cannot pay the loan back. The loan is an unsecured loan so the guarantor's property should be safe, however it has been known for the lender to take the loan to court to turn it into a secured loan when the borrower defaulted on the loan. This would only happen if the lender had no other option or solution to getting his investment back.
Final Thoughts
The guarantor loan is growing in popularity, as more and more people are looking for loans to better their personal lives. It would be advisable to look at your finances and make sure you can afford to obtain a loan before rushing into it, loans can be with you for years to come.
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