Guarantor Loans - What They Are and How They Benefit You
Guarantor loans as the name suggests are the loans which require a person with better credentials and one who agrees to pay off the loans in case the prime borrower fails to repay the loan. Sometime people apply for a loan but they are rejected because of bad credit score.
Guarantor loans as the name suggests are the loans which require a person with better credentials and one who agrees to pay off the loans in case the prime borrower fails to repay the loan.
Sometime people apply for a loan but they are rejected because of bad credit score. In this case you can take a guarantor loan. In guarantor loan, you have to make one person as a guarantor of the loan which will be given to you. Lenders often take the guarantors with good credentials.
Normally people with high credit scores are accepted as guarantors.. Mostly any person from your family or friend circle can become your guarantor with an assurance that they will take the responsibility of the loan and will pay your monthly installments toward your loan amount in case you fail to do so. People with bad credit score can't become a guarantor. For becoming a guarantor the person should have a very good credit score.
Guarantor loans - How do they work?
Guarantor loans are mainly for those people whom loans are not given because of their bad credit score or the people who don't have any credit history as they are taking loan for the first time. Lenders find it risky to grant such people with loan as they don't have any credit history or they have bad credit history so in these cases you need a guarantor who will assure the lender that you will make regular monthly installments without failing. You can make anyone your guarantor but it will be better if a guarantor is from your family or any friend with good credit score.
The guarantor should know all the terms and conditions of becoming a guarantor for his friend. The guarantor is liable if there will be any failure of payments by the primary borrower.
Guarantor loans: Many banks and financial institutions offer guarantor loan, but they have their own policies. You have to check for the best deal available for you which can be beneficial for both the guarantor and the borrower.
Guarantor interest: the interest rate of guarantor loan is usually high because there is a lot of risk involved for lender in granting loans to people with a bad credit score in spite of the guarantor supporting their claim. But the rate of interest varies from banks to banks.
What are the benefits of using a guarantor loan?
• No credit check: If you take a guarantor loan then you don't have to worry of your credit score as a guarantor loan your credit score is not much important given the fact that the guarantor with good credit score is backing up the loan.
• Chance to boost your score: you can boost your bad credit score with the help of your guarantors credit score. If you make your monthly payments on time then the lender will update credit reporting agencies with good report and then your poor credit score can get better.
• Borrow a large amount: people with bad credit score can apply for huge amount loan with the help of the guarantors credit score. They don't require taking payday loans for their requirement.
Guarantor's responsibility: A guarantor should not take anything lightly. It's just not that he is helping his friend to get credit, he is also liable for everything regarding the payments of the loan amount. If the primary lender fails to pay the loan amount then guarantor is liable for paying the loan amount. The lender can sue a guarantor instead of the primary lender if there is any problem regarding the loan. Guarantors promise to pay the debt amount if the primary borrower fails to pay the amount.
Rights of guarantors:
1.Guarantors are liable for making payments on behalf of the primary borrower if they fail to pay the debt amount. The lender can directly call the guarantor instead of the borrower for the payment of the debt amount.
2.Guarantors are not liable for any extra payment other than the debt amount of the primary borrower.
If you have a bad credit score and are really looking forward to a big bad credit instalment loans, getting a guarantor loan can mean a lot of savings for you.
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