Tag: Secured Loans

Here Is Your Guide to Guarantor Loans

However much we all desire to have good credit ratings, life happens and things beyond our control. You might need a loan but due to your bad credit history, chances are most financial institutions will refuse to give you a loan or might give you with insanely high-interest rates. This is where guarantor loans come in handy. The good news is same day guarantor loans are increasingly becoming common today.

What is guarantor loans?

A guarantor loan is a loan type in which a person with bad credit is given A loan using the credit ratings of another person (probably a close friend or relative). The loan is based entirely on the guarantor. Amazingly you could even get lenders giving guarantor loans instant payout.

Who can act as your guarantor?

A guarantor should not be financially connected to you and must be 21 years and above. He/she must have good credit history and in some countries, must own a property. This loan is unsecured in nature and the guarantor is perceived as the security.

What requirements are needed to be eligible for a guarantor loan?

You must be 18 years and above (might be different for some countries), must have a bank account, must not be bankrupt and must be a resident of that country. Read more.

How much interest will you pay?

The interest rates will depend on the lender. Chances are you will be able to get a high amount of money with very little interest if the guarantor has amazing high credit scores.

What if you default payment?

In case you default payment, the bank will ask the guarantor to pay.  You will be chased for the remainder of the loan and any interest built up. If the guarantor defaults payment then the bank can take you both to court.

For a person considering to be a guarantor:

What questions should I consider before agreeing to be a guarantor?

  • Why does the borrower have a bad credit history?
  • Is he/she responsible enough to pay?
  • Does he/she really need the loan?
  • Are you willing to risk your property as security should the loan fail to be paid?

How should you protect yourself as the guarantor?

Limit your liability. Do not cover all your borrower’s obligations including other debts like car loans etc. It is safer to have a limited guarantee (guarantee agreement limits the amount you guarantee).

Receive Documentation.

Never forget to ask for the documentation. Ask for the credit agreement which will state the payment schedule and the terms of the credit. This is usually given with two weeks after signing the guarantee contract. Also, ask for the guarantee contract a proof of your agreement. If the borrower defaults payment, he/she is issued with repossession notices that the lender must send to you too. If there are changes in the credit contract, the borrower should inform you. As a guarantor, you can take the creditor to court if you think the credit terms are oppressive.

Finally, guarantor loans are a good, easier and cheaper way to get loans. But both the borrower and guarantor should be very careful before taking one because a default in payment will do a number to their creditworthiness and lower their score greatly. Check out more: https://www.trusttwo.co.uk/borrowing-from-us/is-a-guarantor-loan-right-for-me

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Most Popular Types Of Personal Loans

There are many different types of loan available and they can be quite different in the way that they work. Some are better suited to overcome a short-term financial emergency while others are better suited for other purposes.

Guarantor Loans: this type of loan is also becoming more popular because it is designed to help those who do not have a perfect credit history to arrange the finance they need. As such it can be a useful tool to improve your credit rating so long as you maintain regular payments to it. They are available for amounts up to £5,000 and for terms of up to 5 years depending on the loan size. The lenders do not require a credit check on the applicant in the underwriting process, and so long as you are not in an IVA (Individual Voluntary Arrangement), or bankrupt anything else is not really a problem. The lenders are able to offer this type of loan because the repayments are guaranteed by a guarantor (co-signee). The guarantor will need to be a homeowner who is financially stable, with an income of £800 or more between the ages of 23 and 70 years old. They can be used for any purpose and open the finance market for those who would otherwise not be able to arrange a loan.

Most Popular Types Of Personal Loans

Payday Loans: this type of loan is a short-term emergency loan available for amounts up to £1000. They are called payday loans because the loan is paid back in gull on your next payday. This is by far the most popular type of loan currently available with millions of people resorting to them to overcome their short-term financial problems. The main reason for their growing popularity is the fact that they are quick and easy to arrange (usually paid out the same day you apply), and also very easy to understand, making them an ideal solution when you need some cash very quickly for whatever reason. Also because the lenders charge a flat fee (usually around 20%) you know exactly how much the loan is going to cost you right from the start and because you repay the loan in full on your next payday it does not have an impact on your long-term financial situation. read more about payday loans at https://www.consumer.gov/articles/1011-payday-loans-and-cash-advances

Secured Loans: with this type of loan the lender will require some form of collateral usually in the form of a second charge on your home, however there are also lenders that will accept your car as security (logbook loans). This type of loan can be arranged for larger loan amounts of up to £100,000, and for terms of up to 25 years. As such are quite often used to consolidate more expensive loans and credit card balances into a cheaper debt consolidation loan, or to fund home improvement. They are usually offered at lower rates as the lender has the collateral to fall back on should you default on the repayments.  A same day guarantor loans can also be used similarly. Contrary to this there is an another loan type called “Unsecured Loan”, click here to know about this type of loan.…

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