Guarantor loans have helped lots of people to get the money they needed, and it could be the right option for you too. There are quite a few attractive things about these loans, and the more information you get on them the better of a choice you will be able to make. The fact is that most people don’t know nearly enough about these loans, and as a result they don’t end up taking advantage of a solution that could really help them. This article will provide you with just the facts about guarantor loans so you can make the right overall choice.
They Are Ideal for People with Bad CreditHaving bad credit can make getting a loan difficult to say the least, which is why so many people end up turning to guarantor loans. These loans are much easier for people with low credit scores to get because there is someone else with good credit (the guarantor) that will agree to take over payments on the loan if the borrower cannot for whatever reason. Even those who have very low credit ratings can still get approved if they have an eligible person to act as the guarantor.
You Cannot Use Just Anyone as Your GuarantorMost lenders have fairly strict standards for guarantors, even those who say they don't offer credit checks. So you will need to keep this in mind before even filling out an application. The person who acts as the guarantor on your loan will need to have a respectable credit score/history, income and employment history. It can be a bit challenging to find the right person for this role, but it’s certainly worth the effort. A lender should be able to tell you fairly quickly if a certain person will get approved as a guarantor on the loan you need. The lender needs to trust that the person will be able to step in and pay off the remainder of your loan if you cannot.
Applying is Very EasyThese days applying for a guarantor loan can be done very quickly and easily by simply going online. If you are interested in getting one of these loans, you will be happy to know that you don’t even have to leave your house. You can fill out an application online, and if you are approved your funds will be electronically transferred right into your checking account. There is always the option to physically go down to a lender’s office in person, but it isn’t necessary anymore. You should hear back about the status of your application within several hours of submitting it online.
Approval is Never GuaranteedWhile it is true that lots of people across the UK get approved for guarantor loans each year, approval is never guaranteed. This means that you should manage your expectations so you don’t get carried away. Nobody should ever just assume that they are going to get one of these loans, because there is always the possibility that your application gets rejected. The stronger the credentials are of the person you get to be your guarantor, the better your chances will be.
There are Certain Requirements You Need to FulfilThe person you get to act as the guarantor will be heavily scrutinized by the lender, but there are certain requirements that you will have to meet as well. You must be a legal citizen of the UK, over the age of 18, and have a valid checking account somewhere. The lender will also look at documents you submit for proof of income to see if you will realistically be able to pay off your loan on time. If you are able to meet these basic requirements, your chances of getting approved are fairly good. There are Risk That Come with Being a Guarantor If someone has asked you to act as a guarantor on their loan, there are a few things that you will need to know before agreeing. It is important that you take a look at some of the very real risks that come with doing this. You will need to keep in mind that there is always a chance that the borrower will no longer be able to make payments on the loan, in which case you will be responsible for paying it back in full and on time. In the event that you are not able to pay back the loan on time, your credit will suffer as a direct result. If you do not think that you will be able to pay back the person’s loan if they fall through, you shouldn’t accept. You will always want to think twice before becoming a guarantor, because once you sign the contract there is no turning back.
Guarantor Loans are FlexibleMost guarantor loan lenders are pretty flexible when it comes to the term length and other things relating to the loans. You should have no problem getting a term that is reasonable and affords you plenty of time to pay back the money you borrow. These lenders are known for being particularly amenable with those whose applications are approved. You simply will not get this same kind of flexibility with other types of loans. You also probably won’t be asked what you intend on using the money for, so you will have complete freedom in this respect.
Is a Guarantor Loan Right for You?Many people have benefited tremendously from guarantor loans, but they aren’t the right borrowing solution for everyone. The more time you spend researching these loans, the better your chances will be of making a smart financial decision. A guarantor loan could help you out a lot if you need money for something major but have bad credit. This is of course assuming that you will be able to find a qualifying individual to sign onto your loan as a guarantor. The process for getting one of these loans is quite fast and simple though, so you won’t have to jump through a lot of hoops.
There are a number of signs that you are ready to get that home loan that you have been thinking about applying for, and it’s important that you know what some of them are. Getting this type of loan is a huge decision, so you will need to make sure that you are absolutely ready. The last thing you want to do is rush into getting a mortgage, because you will only regret it later on. The more time you spend thinking about this, the better of a decision you will be able to make.
1. You Have a Strong Desire to Settle DownIf you are at the point in your life where you really want nothing more than to settle down, it might be time to start thinking about applying for a home loan. It is important that you are ready to stay in one place and maybe raise a family before deciding to get one of these loans. You don’t want to get a mortgage if you aren’t prepared for the new lifestyle that comes with it. Not everyone who gets a house has to start a family, but you should at least be ready to settle down.
2. You’ve Shopped Around for Home Loan DealsIt is incredibly important that you take the time to do the necessary research when it comes to getting the very best deal on a home loan. You need to shop around and compare deals from different lenders. The best thing that you can do to get the loan you need for less is to get quotes from numerous lenders online. Once you have done this research, you will be ready to move forward. Those who do not take the time to do this usually end up spending more than they have to on a home loan.
3. You Have Weighed the Pros and Cons of Buying a HouseNobody should get a home loan until they have taken some time to weigh the pros and cons. Some people prefer renting, but others decide that they really want to own their own house. It will be necessary for you to look at both sides of this issue so that you can make the right choice. You absolutely do not want to even apply for one of these loans before you have weighed the benefits and drawbacks of owning a home versus renting.
4. You Have a Solid Credit ScoreWhile it’s true that you don’t absolutely need a great credit score to get a home loan, it will certainly help you out a lot. It is highly recommended that those with bad credit take some time to improve it before filling out an application for a mortgage. The better your credit is, the lower your monthly payments are going to be. Pretty much any lender is more amenable to giving the borrower a lower interest rate if they have great credit. Take as much time as you need to get your credit to a reasonable and respectable level before going forward.
5. You Have Paid off All Your DebtsThe last thing you want is to have a lot of debt hanging over your head when applying for a home loan. If you have managed to take care of most or all of your debts, you might want to start thinking about getting one of these loans soon. A majority of lenders look very favorably upon applicants that do not have any current debt. It’s also important to keep in mind that you want to avoid taking on any debt during the application process to increase your chances of getting approved.
6. You are Making More at Your JobIf you have recently gotten a raise at your job, you might want to think about getting a home loan. It is crucial for anyone who wants to get a mortgage to be in a financially stable place, so it makes sense that you might apply for one of these loans when you start making more money. It’s still important to crunch the numbers before applying, but this is still a good sign.
7. Decent Size SavingsThose who have a decent amount of money set aside for emergencies in their savings account might also want to apply for a home loan. These savings could really come in handy if you ever find yourself unemployed or fallen on financially difficult times. In fact, your savings could help you avoid foreclosure at some point. The more money you have tucked away in your rainy day fund, the more peace of mind you will have with regards to your home loan.
8. You Have Enough for a Solid Down PaymentAnyone who wants to get a home loan should put down at least 20% from the start. This money will help to reduce your interest rate so you don’t have to pay as much each month over the years. You really shouldn’t even apply for a home loan unless you are able to put down at least twenty percent. While a lot of people are getting loans without putting anything down, this is a really bad idea. When you consider how much extra money you will end up spending on interest over the years, you’ll quickly realize that it’s just not worth it. A solid down payment is pretty much a requirement for getting a mortgage. Final Thoughts The fact is that getting a home loan is nothing to take lightly. It is important that you consider all of these things before filling out an application. If you find that most of these signs apply to you, it very well might be a good idea to get a home loan. You don’t want to rush through this process though, because there is a very strong likelihood that you will end up regretting it in the future. This is the biggest purchase you’ll likely every make, so you want to be very cautious.