A guarantor loan is when a friend of a familymember agrees to repay a loan if you are unable to afford to repay the loan.Guarantor loans are usually marketed to those with bad credit and may not beable to get a loan from traditional lenders. Many guarantor loans havehigh-interest rate often around 50% APR or more. This debt can be likened to ajoint debt as the loan payments are guaranteed by someone else. This means bothyou and your guarantor are responsible for paying the loan back. This can be aproblem if you are unable to fulfill your loan repayment obligations. Here aresome important things to know about dealing with a guarantor loan.
It is very important to know the interest rate of a guarantor loan before applying. This will usually differ from one lender to another as some will offer variable rates that you can change over time while it is fixed with others. The ones with fixed rates are usually better as they will remain the same throughout the tenure of the loan. If you want to get a aguarantor loan with the lowest interest rates you should compare all the offers and pick the one that is best for you.
How to Get a Guarantor Loan?
The process of applying for a guarantor loan is an easy one and you can do it online. Most financial lenders have a
How to Pay Back the Loan
You can set up a direct debit which allows the lender to deduct money directly from your financial balance. Often, there are also options to pay back the loan earlier although this may incur extra fees. Check here.
What Happens if you Repay a Guarantor Loan?
If you can’t afford to pay back your guarantor loan or you fall behind with repayment the lender will ask you to catch up
Is a Guarantor Loan Right for me?
Although a guarantor loan might be a good option for people with bad credit and are looking to improve their credit file it is important you and your guarantor fully understand the risks involved.
You should know the cost of the debt as this can be very high and sometimes leads to further problems. If you want to use a guarantor loan to consolidate on your existing debts there may be