Guarantor Loans Online: What You Need to Know
Guarantor loans are also another type of unsecured credit which can be provided on the same day upon your online application. This lending option operates in the way that the second person involved (a guarantor) is there to secure a loan for the person wanting to borrow.
As long as the second person meets all the requirements they will be able to act as the guarantor. Guarantor loans provide an option for individuals that are struggling to gain financial support off their own accord. The lender is reassured with the strength of the guarantors financial circumstances, meaning if the borrower can’t repay the loan the guarantor steps in.
If the guarantor ticks all the boxes (in the lenders eyes) you could quite easily obtain the loan on the same day.
1. Can anyone access an instant guarantor loan online?
If you have a poor credit history or don’t actually have a credit rating as of yet, one of our instant guarantor loans online could suit your circumstances. We will be able to offer you a loan based on the strength of another person’s credit rating. As long as all the criteria is met by a guarantor pretty much anyone can acquire one of these loans.
This loan type still offers similar terms to our personal loans and payday loans. You will have a choice of flexible lending amounts and time periods.
What you can expect from our short term guarantor loans:
- Amounts: up to £5,000
- Term: up to 12 months
What our larger guarantor loans offer:
- Amounts: up to £15,000
- Term: up to 5 years
Note: the amounts above can differ from lender to lender.
2. What’s the criteria for a guarantor loan online?
Some of our lenders might take more time with their decision but most can normally deliver a pretty fast decision for guarantor loans. The information below is based on the majority of lenders we work with:
- Employed, Self-employed or retired based on proof of income.
- If the borrower lives in England or Wales, the guarantor must also reside in England or Wales.
- If the borrower lives in Scotland, the guarantor must also reside in Scotland.
- The guarantor must have a good or reasonable credit history.
- Must be aged between 18 and 75.
3. Try other loan options before a guarantor
If you can, it’s always worth trying to obtain a loan personally rather than using a guarantor. Our lenders welcome all types of credit ratings for payday loans and personal loans. Check if you qualify via our application form before you look at a guarantor loan.
We are a friendly bunch and so are our lenders. If you have any queries or questions don’t hesitate to get in touch. Contact us directly through the ‘contact us’ page or contact your lender via the information provided in the loan offer.
How “instant” are instant guarantor loans?
Most of our lenders offer instant guarantor loans with same day cash deposits. However, be mindful that it can completely depend on the lender you choose to loan the money with.
For example, the lender might need to act upon further checks of your loan eligibility.
Understanding a guarantor loan, and if you need one
A guarantor loan is a specialty type of loan, in which a financially stable second party agrees to guarantee that any and all repayments are made.
Guarantor loans supply a fantastic way for people with a poor credit history, or maybe even no credit history, to begin building up their credit score. This type of lending is unsecured, so if the applicant defaults on any payment, the next course of action is that the signatory pays the outstanding amount.
What is a guarantor?
A guarantor is a second party that signs the payment contract, agreeing to cover any defaulted payments over the course of the loan repayment period. Typically, a guarantor might be a parent, relative or partner, due to the requirements that are often needed.
To be accepted as an ‘appropriate’ guarantor, there is usually an earning threshold which must be met. This will show the lender that the means to make all repayments are present.
Why choose a guarantor loan?
Guarantor loans are a fantastic way for younger people to build credit. As a younger person may have a very limited credit history, high street banks could refuse a personal loan. Any loan you would be eligible for would usually be either a very low amount, or have a very high interest rate.
If a guarantor is present to agree that all payments will be met by the due date, there is a considerable reduction in risk to the lender. As the loan is still a type of credit, as long as the payments are made in full and on time, it will impact your credit file in a positive way.
A guarantor loan may also be an ideal choice for someone with poor credit, but a strong support network. Guarantor loans are usually a better alternative to bad credit loans, as the interest rate is often lower.
Who should the guarantor be?
So, who can be your guarantor? Different lenders will have different requirements, though by law, the guarantor must be:
- Above the age of 18
- Financially independent from the borrower, or otherwise not financially linked to the applicant
- Able to prove a good credit score, with a complete credit history
In some cases, the guarantor must prove that they are making above a certain amount each month, by showing a history of bank statements. Other situations may involve a guarantor showing a set amount of savings to show that there is financial availability and willingness to clear any overdue balance.
Guarantor loans are still a form of unsecured lending, meaning that the lender can’t secure the balance against something the applicant already owns.
The interest rate on a guarantor loan will usually be lower than that of a bad credit loan, and will nearly always be lower than a payday loan. Your interest rate will be variable, based on your credit history along with your guarantor’s credit history. For example, if you and your guarantor both have a poor credit score, then you may be offered higher interest rates.
As a guarantor loan is still considered a higher risk than an individual personal loan, you may be paying a higher interest rate than if you were to borrow in your name alone. However, as a guarantor reduces the lending risk risk over a bad credit loan, it is normal to be offered a more optimal interest rate.
4. How do the repayments work for guarantor loans?
The repayment structure for an instant guarantor loan is slightly different than other forms of borrowing.
When you apply, your repayment schedule will be worked out similarly to other loans. Your monthly earnings, borrowed amount and the length of the borrowing period will all be taken into consideration to work out an agreeable monthly repayment.
The difference is that the guarantor signs to ensure that all payments will be met. Whilst they will not have to make any direct payments, if the primary applicant defaults on any payment, the guarantor will be expected to cover the due amount.
If your financial situation changes, and you suddenly can’t repay what was initially agreed, it then becomes the responsibility of the guarantor to make any overdue payments.
The guarantor will only ever be liable to pay a balance when the main applicant defaults; these terms must be agreed before the loan is accepted.
Applying for guarantor loans with loanbird
Applying for guarantor loans has never been easier.
Rather than searching the internet for the best deals, you can apply directly through Loan Bird. We’ve scoured the internet to search for the best rates, and as we said earlier you can borrow up to £25,000!
Most people view this lending option as a larger borrowing tool. However, don’t forget we have lenders who specifically deal with short term guarantor loans.
Is the loan application process different with a guarantor?
The loan application with a guarantor pretty much works the same way as any other loan would. The difference speaks for itself really, with the guarantor obviously being the main applicant. Meaning, all the relevant checks are conducted against the eligibility of the guarantor you choose, not you.
Below we’ve put together a quick visual of the process to explain it for you:
Underwriting the loan with your guarantor
The only manual part of the loan process is the lender having a customer advisor deal with the underwriting stage. This will consist of a number of further checks in order to conclude a definitive decision. They might need bank statements or proof of address to cross-reference this with the details they already have.
With a guarantor loan, this part of the process requires the lender to ensure that the guarantor and borrower understand whats expected of them both. So, the lender may need to speak to both of you but this is usually done separately. In most cases you just fill in your part of the application then the loan company deals with your guarantor.
So, If you know you can’t get a loan yourself, but you have a guarantor, you can apply right here.