Given that many people are interested in knowing what their financial options are, it is easy to see why guarantor loans have become quite popular in recent times. There are a number of different loan and credit options to choose from, but not all of them are available to every applicant. There is also the fact that not every option is as attractive as the other.
It is vital that people put in the time and effort to make sure that they know what loan or credit option is right for them, and a great number of people are coming to the conclusion that a guarantor loan is the ideal option for their needs. This is why finding out the truth about guarantor loans can be of considerable benefit to you.
Guarantor loans are great if you have a poor credit score
One of the biggest problems in obtaining credit comes with having a bad or poor credit score or rating. If you have a low rating, it is going to be very unlikely that you will find the support you are looking for from traditional lenders. Your credit score is a very big factor in obtaining funding or finance and you’ll find that having a poor credit rating will negatively impact on your ability to obtain funding from banks or building societies.
This means that you need to look elsewhere and the role of the guarantor in a guarantor loan provides you with the support you need to obtain a loan. As the guarantor is vouching for the applicant and stating that they will make the payments for the loan if the applicant misses a payment, the lending company is a lot more confident and relaxed about offering a loan. This means that they are more likely to provide a loan at an affordable rate of interest, APR, so this should be an excellent way to obtain the funding that you need.
A guarantor loan isn’t the same as a payday loan
Given the level of criticism that has been levelled at payday loans in recent times, it is understandable why people would be keen to ensure that guarantor loans are different from payday loans. Thankfully they are very different and you can feel a lot more confident about taking out a guarantor loan.
You’ll find that the rate of interest charges for these two loans differs greatly and with a guarantor loan, the rate of interest is much more affordable. While both of these loans are primarily aimed at people with a bad credit rating, you’ll find that the support provided by the guarantor is the key difference between these two loans.
There is also the fact that guarantor loans are often for larger sums of money and you have a longer period of time to pay back the guarantor loan. Some people feel as though they are backed into a corner financially and that they have no option but to take out a payday loan. This isn’t the case and you will hopefully find that a guarantor loan is a much more attractive offer than a payday loan.
A guarantor loan is a very traditional style of loan
If you don’t approve of the way that modern loans are agreed upon and provided to people, you should find that a guarantor loan is much more to your liking. This is because a guarantor loan is determined in a more traditional way. Before credit scores were vital in providing payday loans to people, banks and building societies would look for people to provide a guarantor before they lent some money.
This would provide the lender with a greater degree of confidence about the loan and that they would be able to get their money back even if the applicant was unable to make all of their payments.
For many people, this was a much more sensible way of approving loans and it is easy to see why so many people are keen for this style of loan to return. If you believe that the traditional way of determining who received a loan was best, a guarantor loan is likely to be the best type of loan for you.
No one is trying to say that a guarantor loan is the perfect loan, but for many people, it is the most effective way to obtain a loan. If you want to fully take control of your finances, opt for a guarantor loan.
Andrew Reilly is a freelance writer with a focus on news stories and consumer interest articles. He has been writing professionally for 9 years but has been writing for as long as he can care to remember. When Andrew isn’t sat behind a laptop or researching a story, he will be found watching a gig or a game of football.