When it comes to loan applications, it’s inevitable that certain individuals – due to a bad track record or low income – will not be approved.
What is a Guarantor Loan?
In some cases, the answer can be to get a friend or relative to help. Not necessarily by lending you the money directly, but by acting as a guarantor on a loan on your behalf. In this way, the lender offers a loan based on the ability of the guarantor to pay, rather than the borrower themselves. It is important to stress that if you take out a guarantor loan, you are still responsible to pay the debt back. If you can’t, the lender can seek repayment from the guarantor.
Guarantor loans typically have a high interest rate, can be for sums up to about £7,500 and can run for periods of between one and five years.
How do I Know if I’m Eligible?
You might be eligible for loans with a guarantor if you fit into one of the following categories:
While this is not a comprehensive list, these are the main groups of people who may benefit from a guarantor loan.
Who Can Act as a Guarantor?
Anyone can be your guarantor, as long as they are over 18 years old. Very often, guarantor lenders will not take a guarantee from someone who is financially linked to you (for example a husband or wife), but family members, work colleagues, friends and acquaintances are often ok. Those seeking to take out such a loan may ask individuals with whom they have a trusting, open relationship to act as their guarantor.
As a general rule, your guarantor must have a good credit score and most lenders will perform a full credit check on the guarantor so they can be certain that if the borrower can’t repay, the guarantor definitely can.
What do I Need to Think About Before Taking a Guarantor Loan?
If you do not repay your loan, the guarantor will have to. This will include interest, any late fees and sometimes other charges that can be considerable. You might find that if your guarantor has to pay up, they lose their money and you lose a friend! Always be absolutely certain that before you borrow money, you can afford to pay.
Loans from MYJAR
Sometimes for small amounts, you might find that you don’t need a guarantor. As a responsible lender, MYJAR only offers short-term loans to people in regular employment. We require the borrower to pay back their loan themselves. However, we will consider your loan request even if you do not have a good credit score, so don’t be deterred from applying.
We're an award-winning direct lender, committed to providing clear, simple and responsible loans when our customers need us. If you need some assistance to meet an urgent financial requirement on either a short or long term basis, APPLY NOW for one of our loans.
Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk