Guarantor Loan Term

The term guarantor loan is usually associated with the term unsecured. Guarantors are normally close relatives, close friends, or next of kin who is appropriate according to the creditor. The term unsecured is closely connected to the guarantor itself, since he or she is to say responsible for credit pay off.

Closely, a guarantor is the person who repays the rest of the debt, if somehow the person who loaned the credit is not able to make the payment. The word itself says guaranty, meaning a security issue is needed for that kind of loan, so another person is considered to be involved for this credit purchase to ensure that it will be fully paid off. Guarantor loan is mostly considered for people with no credit score, for example foreigners, or people who never obtained credit in the past. This is also considered for people with damaged credit score, or to say who in the past, missed payments.

credit-report-iconYour guarantor doesn’t always have to be someone related to you. First of all the person being your guarantor has to agree to the bank’s terms, and to have a positive credit score. Since banks are not usually willing to give loans to people with an imperfect credit score, such people tend to turn to some guarantor loan companies. Even though they offer lower interest rates, those are still mostly higher than the rates for mainstream bank consumers.

Nonetheless, terms for applying for a guarantor loan are simple, and require that the person who is to be the guarantor, has to be over 21 years old and to have positive credit score, and only in some cases to be a home owner. The usual credit checks from the bank are necessary, like bank statements, bank details and proof of ID.

mortgage-clip-artBefore thinking about this kind of loan, person must consider annual percentage rate, that tends to get even over 50 percent, which means that the user of such loan must be willing to pay double the amount that he receives. Unfortunately this is one of the lowest rates available for persons with bad or imperfect credit score, even though a lot of different guarantor loan companies have different deals. One of the good sides of guarantor loan is that there are no hidden fees, most of the time, or any kind of extra charges, throughout your loan period. Important thing is that your time limit for each payment must be taken care of, in other words paid on time, otherwise your guarantor could suffer financially.

This kind of commitment is definitely not for everyone, but when in need, and with a poor credit history, people usually have no choice. All there is to do is to find a trustworthy person, with a good credit history, who is also willing to take on such a serious commitment. Since these kinds of loans are usually not approved in large sums, so the commitment itself is not so grave as it may seem.

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