About Guarantor Loan
If you are facing any difficulty to get a loan due to your poor credit score, a guarantor loan might be a good alternative for you. This is where a family member or a friend steps in to give a guarantee to pay the debts if you miss out on the repayments. A guarantor loan is an unsecured loan which means that none of your assets is attached to the debt.
Guarantor loans are preferred by those with a bad credit profile. The lenders fail to offer them a loan without any guarantee. The guarantor will be called upon only when you make a default in your repayments. The guarantor loan may also boost up your credit score as every time you make a timely payment on your debt you are marked “good “as per your rating. But before going ahead with such loans it’s better that you keep a check on your credit rating or else you may face rejection and may end up damaging your credit score.
Frequently Asked Question
How Does A Guarantor Loan Work
Guarantor loans can be resorted to when your standard loan application has been turned aside. To secure a loan you need to be at least 18 years of age. The guarantor should be aged above 21, besides possessing a good credit rating and financial stability. Being a risky affair for the lenders, the interest rates on such loans is higher than the standard ones.
The repayment term for such loans is usually one to five years with the payments are split into monthly installments. Of course, if you make a default in your payment, you may end up paying interest which may further sink you into debt. The rate of interest charged will be determined by the loan amount and duration, personal circumstances of the borrower.