Guarantor Loans For Bad Credit
When you have a good credit history, life is easy. Well, ok that’s not always true, but life is easy when it comes to borrowing money! You have a huge choice, because everyone is willing to lend to you. You can choose from any of the high street lenders. If you shop around enough, you’re likely to get the exact loan you’re looking for, along with a favourable interest rate.
However, for many of us this is not the case. Many of us have bad credit histories, meaning that it can be much more difficult to lend money.
What can lead to a bad credit history?
- Late payments
- Missing payments altogether
- Debt written off through an inability to pay
- Debt solutions such as Insolvency Agreements
- Home Repossessions
- County Court Judgements (CCJ’s)
- Large amounts of existing debt
It can easily feel like you are stuck in a rut with no options available. However, this is not the case. Although your options will be more limited, there are still a number of options available. One option is a Guarantor loan. Guarantor loans are designed for those of us with bad credit. If no one on the high street wants to lend to you, a guarantor loan may be an excellent option. Your guarantor provides the lenders with the extra security they need to approve the loan. Your guarantor agrees to pay the loan in full if you cannot do so yourself.
Why do people with bad credit get guarantor loans?
Apart from the obvious need for money, there are a couple of other reasons why people with bad credit get guarantor loans. Firstly, guarantor loans are usually a simple, easy and hassle-free way of getting money. Secondly, guarantor loans can be an excellent way of improving your credit history once you have paid off the loan in full.
Whilst paying your loan off, try your very best to keep up with the scheduled repayments. Be sure that you can pay back your loan before taking it out so that you don’t end up in a worse position than when you started. Depending on your individual circumstances, if you pay your guarantor loan off in full and on time, you may have a greater number of options available the next time you want to borrow money.
You should never get a guarantor loan with the view that your guarantor will pay the loan off if you can’t. Although this is the reality of the situation, just see the guarantor as extra security for the lender. If you don’t pay your loan off, you credit history will become even worse. You are merely using the good credit history of your guarantor to get a loan that you will pay off yourself. Additionally, make sure the other person is fully aware of the potential implications of becoming your guarantor.
As long as you use the correct lender and you are confident you can pay back the loan, a guarantor loan can be an excellent way to quickly improve your credit rating.