If you have bad credit and you need to get a loan as quickly as possible, and you know that a bank will deny you, it is sometimes a good option to get what is called an unsecured guarantor loan. In this instance, the guarantor is the person that is going to co-sign with you on the loan, the person that will be responsible for the loan if you decide to default.
This is often a bad decision to make, especially if you know that the other individual is not that reliable if they have bad credit, is probably four reasons such as the did not make their payments, or did not make multiple payments, which has led to them being in this position. Here are a few reasons why you might want to consider doing this, if you do have a friend or family member that needs this type of help.
Did you know that you can still apply for guarantor loans with low APR even if you have a bad credit rating? Please return to our homepage for more information.
This is often a bad decision to make, especially if you know that the other individual is not that reliable if they have bad credit, is probably four reasons such as the did not make their payments, or did not make multiple payments, which has led to them being in this position. Here are a few reasons why you might want to consider doing this, if you do have a friend or family member that needs this type of help.
Did you know that you can still apply for guarantor loans with low APR even if you have a bad credit rating? Please return to our homepage for more information.
How a Guarantor Loan Works
This type of loan is actually very easy to understand. It is simply an unsecured loan that is probably for several thousand pounds that someone needs in order to purchase something of significant value. They might need you to help them with purchasing a car, and they will not be able to get the car because their credit is going to create a red flag, preventing them from making the deal.
If you were to come on board with this individual, and co-sign with them on this loan, it is the only way that they would be able to get the guarantor loan that they need, but then you would be responsible in case they do not make the payments.
If you were to come on board with this individual, and co-sign with them on this loan, it is the only way that they would be able to get the guarantor loan that they need, but then you would be responsible in case they do not make the payments.
Can You Get Out Of It?
Unfortunately, the way that these loans are designed, the paperwork specifically states that if they default, you are responsible. The only way that this could be fixed is that there is actually a clause in the paperwork which states that you could potentially back out, but no lender is ever going to put that in. They need to know that you are going to help them get the money back, so you will be stuck with the repayment of this loan.
The only possible clause that could be put into the documentation is listing assets that you have, perhaps some form of collateral such as a vehicle or boat that you own, that you could either sell, or turn over to them, in the event of this person defaulting on loan.
The only possible clause that could be put into the documentation is listing assets that you have, perhaps some form of collateral such as a vehicle or boat that you own, that you could either sell, or turn over to them, in the event of this person defaulting on loan.
What Is The Interest Rate?
The interest rate that the loan will be at will be completely dependent upon your credit rating. Since you are going to be responsible for the payments if the other person defaults, they will usually credit rating in most cases to determine how much the rate will be. Other companies may actually use the credit rating of the other person simply because they will be able to charge more for the loan. Either way, it is an interest rate that will be far below the amount that you would pay with an advance on a credit card, and certainly lower than a loan from a payday loan company.
If you really do want to help someone, and their credit rating is not really the result of unreliability but unfortunate circumstances, this is probably a good decision to make. You can help someone out, and despite having a low credit score, they will more than likely make the payments just as planned, without any adverse effect on your credit rating.
Remember, if you do not pay on the loan, this will also affect your credit rating, so you have a lot riding on your decision to help this person out. Just be sure that you're making the right decision, and choose a bank that will give a reasonable interest rate on the loan that they will provide, so that this gesture of kindness will be as painless as possible.
For more on credit scores and how important they can be, please click here.
The following video explains some of the information that is factored into your credit report when calculating your credit score:
If you really do want to help someone, and their credit rating is not really the result of unreliability but unfortunate circumstances, this is probably a good decision to make. You can help someone out, and despite having a low credit score, they will more than likely make the payments just as planned, without any adverse effect on your credit rating.
Remember, if you do not pay on the loan, this will also affect your credit rating, so you have a lot riding on your decision to help this person out. Just be sure that you're making the right decision, and choose a bank that will give a reasonable interest rate on the loan that they will provide, so that this gesture of kindness will be as painless as possible.
For more on credit scores and how important they can be, please click here.
The following video explains some of the information that is factored into your credit report when calculating your credit score: