What is a guarantor loan?

A guarantor loan is a kind of unsecured loan, which provides borrowers with an alternative lending option by allowing them to use the credit worthiness of a second person, who acts as a guarantor.

 

The Guarantor needs to be over 21, hold a good credit history and own their own home in the UK. They can be a family member, work colleague or even a friend, but they cannot have any financial ties to the applicant looking to borrow money.

 

Is a guarantor loan right for me?

The guarantor loan option is beneficial to borrowers who have a poor credit history or have struggled to obtain credit via other borrowing options. This option can sometimes offer a higher borrowing amount than that of a person applying for other credit options with a poor credit history.

 

What can I borrow?

You can borrow up to £7000 with a guarantor loan, however this amount will depend on your personal circumstances.

 

How much interest will I pay and what happens in the event of a miss-payment or default?

Interest rates will vary depending on both the lender and the applicant’s credit worthiness and borrowing risk. In the event of a miss payment or default, the lender will ask for the guarantor to make the payment. The lender will chase the named applicant chase you for the remainder of the loan plus along with any interest accrued, and in some cases take both the borrower and their guarantor to court.

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