In today’s complicated economic environment, guarantor loans are quickly gaining more popularity. After all, with a guarantor loan, you have a better chance to get your hands on the loan product you need, regardless of whether you have bad credit or only a minimal deposit. However, because guarantor loans are still a relatively new concept for a lot of borrowers, it might be a little more confusing to apply for these kinds of financial solutions, than the average personal loan.
If you’re hoping to get some support through a guarantor loan, then it pays to do your homework. Knowing exactly what you need to do before you get started can help to save you from some unnecessary risks when you begin to borrow.
Getting a loan is something you should be sure you really need. Getting a loan for a holiday, for example, is a bad idea! I got a loan a couple of years ago add I was stuck in a cycle with having a car on finance. I was paying monthly and after two years, could either pay the car off, get a new one or walk away with nothing. After getting a new every two years for 6 years, I decided I didn’t want to be stuck with a car on finance. So I applied for a loan to pay the car off in full. I ended up with a pretty decent deal on the loan and I’ve almost paid it off!
Should You Get a Guarantor Loan?
Before we offer a few tips on how to improve your chances of success with a guarantor loan, it’s worth questioning whether this type of financial product is right for you or not. For those who are unfamiliar with the term, a guarantor loan is a type of secured loan that requires a person to have a second individual behaving as your guarantor. If you get a guarantor loan, and you’re unable to make your repayments, then your guarantor will need to step in on your behalf.
Guarantor loans are typically targeted towards people who would struggle to get a loan through traditional means. For instance, if you find it hard to get a good deal on your loan because you have a poor credit history, or you’ve been rejected elsewhere, then a guarantor loan could give you a second chance to get the money you need.
Start by Assessing Your Needs
Before you jump into the marketplace head-first and start looking at what different providers might be able to offer you in terms of guarantor loans, it’s worth taking the time to carefully assess your needs. Decide what you’ll be using the money for, and exactly how much you need to borrow to put yourself in a comfortable position.
Remember, although you do need to borrow enough cash to avoid any potential problems in the long-run, it’s important to think about what you can actually afford to take out in terms of finance. That means assessing your budget carefully and planning your loan repayments. Make sure that you work this part out as early as possible.
Find a Suitable Guarantor
Finding a suitable guarantor is crucial to making sure your loan is a success. Most of the time, banks and lending societies feel most comfortable giving guarantor loans to people who are putting their parents on their policies. This is because parents generally have a better amount of equity to put up in terms of security for the loan. Even if you choose not to use your parent as a guarantor, you’ll probably need to pick someone in your immediate family circle.
Additionally, you’ll have to check that your guarantor is both suitable and qualified to support your application. Your guarantor will need to be at least 21 years of age, and a homeowner within the United States. Once you have your guarantor secured, you’ll be able to start comparing deals.
Compare Different Deals
Just like any other form of financial product, not all guarantor loans are alike. Some will come with better interest rates and options that make them more appealing to your specific circumstances. You should make a point of scouting out and comparing several options before you settle with one. Although you don’t necessarily have to compare thousands of deals, visiting a comparison website can be a good way to find the best APR and the best terms for your loan.
Remember, when comparing products, don’t just look at the basic interest rate. You’ll need to think about factors like representative APR, and any upfront or hidden fees that might come into play when you’re making your repayments.
Making the Most of Your Guarantor Loan
Remember, choosing to take out a guarantor loan is a big decision, so it’s important to make sure that you think carefully about your options before you make this choice. However, if you’ve struggled with getting finance elsewhere and you need a chance to get the money you need without excessive interest rates, a guarantor loan could be the best option. As long as you can make your payments on time, a guarantor loan can be a safe and reliable way to borrow money.