Choosing the guarantor is probably the hardest part of this decision. You will have to think about whether you know anyone that is willing to help you with this. You might choose a family member or a friend but they will also need to have a good credit score as the lender will check this. It is really important to make this choice carefully as you will need to think about whether it will have an effect on your relationship with them. You will need to consider whether you might fall out over this or whether it might impact what they think of you. Imagine the unlikely situation that you cannot make any of the repayments and how that might make them feel and what effect that might have on how they feel about you as well. If you know someone that has offered to help you out financially then they could be a good choice. Otherwise you will need to think carefully about who you know, their financial situation and whether they are likely to help you. Then you need to think about how them being your guarantor might have an effect on your relationship with them.
How it compares with other loans
A guarantor loan is different to other loans because it relies on you having a relationship with someone else where they will be prepared to make the loan repayments if you cannot afford to. It is also quite an expensive way of borrowing which means that you should be really careful to compare it to other forms of borrowing with regards to costs as well as comparing different guarantor lenders to find the cheapest. If you have a high credit score then you may be able to apply for alternative types of loans which could be cheaper so it is worth checking this out first. If you do not have a good credit score then there will be other loan options available to you as well; such as pay day loans. These tend to lend smaller amounts of money and can still be quite dear but work slightly differently in that you repay them in a lump sum. This could be more suitable for your needs and it is worth considering them. You may also be able to get a loan where you use something as collateral such as a log book loan using your vehicle. These have a different set of risks associated with them as you could potentially lose your vehicle if you do not keep up the repayments, but it might be a better option for you. It is certainly well worth comparing the different types of loans available to you to make sure that you find the one that is most suitable. Not only could this save you money but it could also mean that you get one that fits your purposes better with regards to the repayment schedule and other features. Take some time to consider it because it does not need to take too long but will be worth it.
Is a Guarantor Loan Right for me?
There are many types of loans available but if you have a low credit score then you may be more limited in what you can get. Many of the standard loan types will be unavailable but there are still some products that will be and a guarantor loan is one of these. These loans can still be more expensive than other types of loan but they do give those with a poor credit record an opportunity to borrow money. It is worth having a good understanding of how a loan like this works and then you will be able to decide whether it is the right type of loan for you.
What is a guarantor
With a guarantor loan you need to nominate a guarantor who will cover the cost of the loan repayments if you are not able to manage them. This means that you will have to find someone that has a good credit score and who is willing to help you out if you need it. You will be expected to cover the repayments yourself but in the case of you not having enough money then they will be asked to pay instead. You will obviously need to find someone who is willing to help you out like this. It might be that they are a family member or a close friend. They would need to have a good credit score too. The loans are for higher amounts of money than other loans that are available for those with a low credit score such as a pay day loan which means that they can be more useful and will allow the borrower to be able to buy more things with the money they get.