Many people are delighted about the new type of loan available in the financial market today. The guarantor loan is a type of unsecured loan which uses a guarantor to minimize the risk to the lender. The guarantor must meet certain criteria, including having a good credit history to back up their application to guarantee the repayments, should the borrower fall into financial difficulty. Generally the guarantor is usually a good friend or a family member of the borrower.
A guarantor loan is now widely considered to be one of the most in demand and simplest form of loans currently available. As long as the borrower finds someone who has a good credit rating, who is prepared to back their application, there is an excellent chance that the application will be granted.
The role of the guarantor holds a great deal of responsibility because ultimately, if the borrower fails to repay the balance of the loan in full, the guarantor will be legally obligated to repay any outstanding amounts. This is why, it is better to have close friends or relatives act in the role of guarantor because they are more likely to accept this responsibility.
Lending companies, whether banks or private entities, allow the borrower to qualify for a guarantor loan as long as they are not officially bankrupt and have a guarantor who is a dependable and reliable person with a good credit rating to stand by their side.
Those who are eligible for guarantor loans include people who have:
A poor credit record or No credit history at all, moving address regularly or are not on the electoral roll, incurred debt arrears or CCJs, previously Defaulted on credit card or loan repayments previously even with any of one (or even more than one of these) the chances are that the presence of a guarantor will be enough to ensure that the loan application is granted.
These types of loans involve no credit scoring for the applicant and also do not incur any set up fees. They also offer the major benefit of to the borrower on the same day the application is submitted, assuming all of the lender's criteria are met.
All bad credit loans have their individual advantages and disadvantages and in the case of guarantor loans, they are nearly always significantly cheaper than many of the other bad credit loans available on the market such as payday loans.
Perhaps most important of all, guarantor loans offer a proven method of rebuilding your existing credit score by demonstrating that you can meet your repayments on time and are in fact a safe bet to lend on. This ensures that your financial past does not have to dictate your future and you may well find that standard unsecured personal loans become attainable lines of credit in the future.