Personal loans are one of the UK's easiest forms of credit. Applying for a personal loan with guarantor may give you leverage on better terms and repayment conditions, or enable you to take out a loan where you do not perhaps have the credit profile to take out a long by yourself.
When you apply for a personal loan with guarantor, a well-qualified third party ensures your loan will be repaid. Do not confuse a "guarantor" with a "joint borrower." If you and a partner apply for a £10,000 loan, you both must qualify together, and you are equally responsible for the payments, because you are "joint borrowers." If, however, one of your partner's relatives is able to guarantee the loan, they agree to repay your debt if you and the partner default. In fact, this person will execute a separate contract and go through a separate qualifying process to serve as your personal loan guarantor. The lender may allow some grace for you and the partner, but the lender will conduct a thorough credit check and means test with regards to your guarantor. The lender would require assurance that the guarantor is able to repay the loan if you fail to maintain your payments.
Personal loans for all purposes
As the name implies, personal loans serve a variety of strictly personal purposes from debt consolidation to financing cosmetic surgery. Many lenders do not require "security" or collateral for personal loans, but they protect themselves against risk by charging extremely high interest rates. Applying for a personal loan with a guarantor, therefore, may help you secure a much lower interest rate, or it may improve your chances of qualifying for a larger loan.
Naturally, applying for a personal loan with a guarantor makes qualifying easier. Although you may need to establish your own credit rating, your lender will grant a little more latitude with poor credit scores because you have a guarantor. Your guarantor, on the other hand, will be assessed more thoroughly, because the lender will seek assurance that the guarantor has sufficient property, equities, or cash reserves to cover your loan in case of default. Your guarantor also should be aware their obligations to your lender may be taken into account when applying for their own personal loans or credit cards, because lenders will calculate this obligation in their income against expenditure.
Non homeowner guarantor loans
With the UK and indeed the rest of the world suffering under the pressure of the recession in recent years, securing a personal loan has become more and more difficult for those without the security or collateral.
Home owners would normally be more favourable due to the very fact that they would have a history of compliance with mortgage payments, the security their property would offer against any borrowing applied for, and usually hold a better credit standing as a result. People in rented accommodation or living with parents on the other hand, may encounter more difficulties when attempting to secure the credit or funding they require most likely due to the lack of collateral or security they can offer.
In such circumstances, a guarantor loan is indeed an option. By adding a home owner to the application, the applicant is offering a guarantee that the loan repayments can be made and the lenders are more inclined to accommodate in these cases. Along with a reasonable credit history, the guarantor can be a family member, friend or possibly a work colleague but it is of vital importance that this person understands fully what they are entering into and their possible obligations. In such cases guarantor loans are usually from around £500 and up to £3000, although some lenders may allow a higher borrowing based on your repayment criteria.
When you apply for a personal loan with guarantor, a well-qualified third party ensures your loan will be repaid. Do not confuse a "guarantor" with a "joint borrower." If you and a partner apply for a £10,000 loan, you both must qualify together, and you are equally responsible for the payments, because you are "joint borrowers." If, however, one of your partner's relatives is able to guarantee the loan, they agree to repay your debt if you and the partner default. In fact, this person will execute a separate contract and go through a separate qualifying process to serve as your personal loan guarantor. The lender may allow some grace for you and the partner, but the lender will conduct a thorough credit check and means test with regards to your guarantor. The lender would require assurance that the guarantor is able to repay the loan if you fail to maintain your payments.
Personal loans for all purposes
As the name implies, personal loans serve a variety of strictly personal purposes from debt consolidation to financing cosmetic surgery. Many lenders do not require "security" or collateral for personal loans, but they protect themselves against risk by charging extremely high interest rates. Applying for a personal loan with a guarantor, therefore, may help you secure a much lower interest rate, or it may improve your chances of qualifying for a larger loan.
Naturally, applying for a personal loan with a guarantor makes qualifying easier. Although you may need to establish your own credit rating, your lender will grant a little more latitude with poor credit scores because you have a guarantor. Your guarantor, on the other hand, will be assessed more thoroughly, because the lender will seek assurance that the guarantor has sufficient property, equities, or cash reserves to cover your loan in case of default. Your guarantor also should be aware their obligations to your lender may be taken into account when applying for their own personal loans or credit cards, because lenders will calculate this obligation in their income against expenditure.
Non homeowner guarantor loans
With the UK and indeed the rest of the world suffering under the pressure of the recession in recent years, securing a personal loan has become more and more difficult for those without the security or collateral.
Home owners would normally be more favourable due to the very fact that they would have a history of compliance with mortgage payments, the security their property would offer against any borrowing applied for, and usually hold a better credit standing as a result. People in rented accommodation or living with parents on the other hand, may encounter more difficulties when attempting to secure the credit or funding they require most likely due to the lack of collateral or security they can offer.
In such circumstances, a guarantor loan is indeed an option. By adding a home owner to the application, the applicant is offering a guarantee that the loan repayments can be made and the lenders are more inclined to accommodate in these cases. Along with a reasonable credit history, the guarantor can be a family member, friend or possibly a work colleague but it is of vital importance that this person understands fully what they are entering into and their possible obligations. In such cases guarantor loans are usually from around £500 and up to £3000, although some lenders may allow a higher borrowing based on your repayment criteria.