Guarantor loans are unsecured loans that need you to have a second person as your guarantor. It may be difficult for you to get a loan, especially if you have no credit history or if you have a bad credit history. Guarantor loans can help you get the money you need. In most cases, guarantor loans last between 1 to 5 years.
Who qualifies to be a guarantor?
Anyone can be your guarantor when you need a guarantor loan. However, the person who is going to be your guarantor should not be financially linked to you (e.g. your spouse). A family member, colleague or friend can be your guarantor. The guarantor must be 21 years or older and should have a good credit history.
If you fail to pay your loan in good time or if you default on the loan, the lender will ask the guarantor to step in. You will also be chased by the lender to pay up the remainder of the loan and the accrued interest. The lender may also decide to take you and the person who guaranteed the loan to court.
Rebuilding your credit score with guarantor loans
When you make your loan repayments on time, you will be able to rebuild your credit score. This loans will help to make it possible for you get credit cards or unsecured loans in future if you have a bad credit history. You will also be able to get loans at low interest rates. If you are planning to take a guarantor loan, you should keep in mind the fact that this loan can only help you rebuild your credit score if you make your payments on time. That is why it is advisable to borrow in a manner that is sustainable. Make sure that your guarantor understands all the risks involved.