Wednesday 10 December 2014

Introducing Talk Guarantor Loans

Talk Guarantor Loans is a brand new guarantor loan brokerage that have recently launched into the market. They differentiate themselves from the competition by offering a more personalised service, and making sure they find you a lender that is fit for purpose.

Other brokers in the market will try and automate everything, and in the process you are often matched to a loan company that does not truly meet your needs. Or even worse, in some situations your details will be passed to EVERY lender on the list which means you will end up getting multiple phone calls, from multiple people, offering multiple products (some who may even charge a fee) and at the end of the day you may be left with no loan and a general sense of confusion.

Talking is almost king at TGL (only second to the customer), which means you will be greeted by a human, UK based loan expert who will fully discuss your situation and allow you to make an educated decision on who you want to borrow from.

To learn more, or to apply with them, visit https://www.talkguarantorloans.co.uk.

Monday 16 June 2014

Getting a Guarantor Loan to Pay For Your Wedding

The search for a soul mate and life partner can often be a long and arduous journey, and before you stumble across ‘the one’, you will undoubtedly kiss a few frogs, and encounter a number of weird and less than wonderful characters. Upon meeting that special someone, all of this bother is resigned to the past however, and following a period of courting and dating, the time will eventually come to start thinking about the big day.

Weddings: magical but expensive

Now it goes without saying that your wedding day will be one of the most important, if not the most important, days of your life for both you and your partner. Unfortunately such importance comes at a high price, and as any married couple will tell you with a wince, your wedding day will also be one of the most expensive days of your life too, what with the average wedding in the UK costing in excess of £18,000. It is all too easy to get swept up in a whirlwind of excitement, expectation, and pressure, and so much does it matter to make the big day perfect that love will almost always override financial prudence.

Keeping your big day in budget

So financially speaking, the big two tasks for a soon to be married couple is to firstly keep a lid on costs by keeping expectations realistic, to prevent costs from spiralling out of control. Secondly is the small matter of funding it! It is quite feasible to budget carefully for a wedding and plan out a day which is memorable for all the right reasons, and still keep the cost far below the £18,000 average. However there is no escaping the fact that a wedding will cost you somewhere in the thousands, and if you like many others do not have that kind of money to hand, you will no doubt opt to borrow in order to cover the costs of your wedding.

What is a guarantor loan?

If you have a less than perfect credit score and are unable to secure credit from a mainstream lender, why not consider a guarantor loan as a means for paying for your wedding day? Guarantor loans, a traditional form of trust based lending, are an increasingly popular form of acquiring much needed credit. You can borrow anywhere between £1000 and £7,500 over a 1 to 5 year period (depending on the amount borrowed), even if you have less than perfect credit. And with rates of interest fixed at 47.9% APR for a £3000 guarantor loan over 3 years, repayments can be made which are both convenient and affordable.

Guarantor requirements

You will need to find a suitable guarantor to support your application and co-sign your loan agreement once it has been processed. This is in line with the trust based nature of guarantor lending, and it is a promise that the guarantor will only be contacted and asked to make repayments if you can’t. Anybody, aside your husband or bride to be can act as your guarantor, provided they are a homeowner, earn a sufficient income to potentially cover repayment costs, and have a good credit history.

Thursday 5 June 2014

Keeping Your Guarantor In The Loop

Introduction

Looking for credit in this day and age when you don’t have a particularly great credit history will probably have brought you to the door of a guarantor lender. Guarantor loans have grown greatly in popularity since the recession hit and the mainstream lenders became more wary about lending to anyone who couldn't prove they were great at paying credit back. They’re pretty popular now as a result, and although they may seem like a new concept, the fact is that guarantor lending used to be the only way to borrow if you didn't have an asset to borrow against.

The Support of the Guarantor

If you've taken on a guarantor loan in the last couple of years, you’ll know that the guarantor (a close friend or family member) is an integral part of the process. They sign a loan agreement along with you, and therefore agree to pay any loan instalments that you can’t pay. This is rare, as most guarantor lenders will do a full check on anyone they’re lending to, in order to ensure that the loan is affordable to them. To avoid doing these checks would be unfair to both the borrower and the guarantor, as both would end up in trouble through the borrower not being able to pay.

Making Repayments

One of the main things that you need to do as a borrower, aside from making sure you meet each and every repayment in full and on time, is staying in contact with your guarantor. It’s unlikely that your lender will contact your guarantor unless there is a problem. For this reason, it may be handy to keep your guarantor updated when you make payments, and you should certainly give them prior warning if you’re worried about making a payment, as this could trigger contact from the lender.

Keeping Your Guarantor in the Loop

Although it may feel unnecessary to let your guarantor know every time you pay a loan instalment, it could reassure them that you’re handling the loan properly and it will act as a gentle reminder that they've signed up to lend a helping hand should something go wrong. There have been cases where a guarantor has been asked for payment, and they've forgotten all about agreeing to be part of their relative’s/friend’s loan. This can cause a bit of tension and stress, so keeping your guarantor in the loop is an important part of managing the loan properly.

Choosing the Right Guarantor

Your guarantor should be someone that you know and trust, so keeping a close relationship with them throughout the loan term is very important. In the case of most, this will be a no-brainer, but for some their guarantor has come from a short but intense friendship which has dissolved or grown apart since the loan was taken out. Keeping in contact with someone (even if you may not have done so without the loan) can really help if you find you have problems paying one month, or if the lender has a query or question that needs answering by them.

Tuesday 27 May 2014

Guarantor Loans: A Smart Alternative to Payday Lending

If you happen to have a good credit score, you will be fortunate enough to be able to benefit from near record low borrowing rates on a wide range of credit products, such as loans, credit cards, overdrafts, and mortgages. If on the other hand your credit score is less than perfect, the red carpets will quickly be rolled back and the doors to the mainstream lenders will unfortunately be slammed shut. Much to the fury of many consumers, the banks and other mainstream lenders remain very cautious and risk averse when it comes to the subject of consumer lending, which has strongly worked in the favour of the payday lenders.

People turn to payday lenders for lack of a better idea

The constant barrage of TV adverts and press surrounding the payday lenders means that they are more often than not at the forefront of people’s minds, so when somebody is rejected by their bank, it is often the payday lenders who have been the first port of call immediately after. And make no mistake, they are convenient! But however convenient their quick pay outs and a no questions asked approach to lending may be, the simple fact is that the enormous interest rates of easily over 4,000% APR can be crippling and there are hundreds of thousands, if not millions who have quickly found themselves struggling in a debt spiral after their payday loan repayments have spiralled out of control. With this in mind it is unsurprising that consumers have increasingly been turning to alternative means of borrowing money when they are in a financial pickle, and of all the alternatives out there, guarantor loans have increasingly become the borrowing option of choice for those with poor credit.

What is guarantor lending?

Guarantor lending may appear at first glance to be a new approach to borrowing but it is in fact a throwback to a more old fashioned form of borrowing from years gone by. A guarantor loan applicant will be asked to find a friend, family member, or colleague to co-sign their loan and act as their guarantor, and in return for this they will be able to borrow small to large sums of money over a short to longer-term time frame. And more importantly, not only will a guarantor loan be flexible but it will also offer much lower rates of interest and a much more affordable loan all round. A borrower will be able to borrow anywhere between £1,000 to £7,500 over a 1 to 5 year period, but importantly they will be able to do so at a much more reasonable 47.9% APR; just to paint a picture, a guarantor loan of £3,000 taken out over 3 years will cost £143.98 per month in repayments. Now this, compared to a payday loan which charges around £25 for every £100 borrowed, represents a much more suitable borrowing option if you are looking to consolidate debt, replace a car, or cover a large unforeseen expense. Your guarantor, who will need to have good credit and be between 25-65 if they are a tenant or 25-72 if they a homeowner, will not be contacted under any circumstances unless the borrower cannot meet repayments. So if you need to borrow, why not go for a guarantor loan?

Monday 19 May 2014

What does it take to be a Guarantor?

Being a guarantor is something that you may have heard of before, as the idea behind having one has been around for a long time. The re-emergence of guarantor lending since the recession has brought guarantors out into the open again, although they never really went away.

If you have ever rented a home then it’s likely that you would have had to get a guarantor for your rent (this is particularly common for university students or for those who have moved out of home for the first time. It’s also common to ask anyone on a relatively low income to have a guarantor in place). A guarantor is someone who you know well, who is more established than you are financially, who could pay your rent in the event that you don’t, for whatever reason. They would have to sign an agreement committing to this, and it’s likely that they’d be credit checked to confirm that they are who they say they are.

In the distant past, long before telephones or computers and credit checks, if you wanted to borrow money then a guarantor was a staple of the application process. It’s likely that they would act like a ‘sponsor’ and be known to the bank manager. The loan would be paid out on the condition that the guarantor was an upstanding member of society – the bank manager would know their financial situation and would help you out on the basis that they could vouch for you. Back then, status was everything, whereas nowadays the class system has pretty much lost a lot of its former power.

Guarantor loans have emerged again in the years after the recession hit, as all of a sudden access to easy credit has been greatly reduced. Before the financial crash, the banks were happy to lend money to many different people without doing a huge amount of pre-payout checks. This was a good time for the economy in the sense that people were spending money, but unfortunately not all of what was borrowed was making its way back to the banks, as they had agreed to lend out much more than customers could afford to pay back. Now that the banks have tightened their lending criteria, many people have been left out in the cold when it comes to credit, but guarantor loans can now utilise the ‘vouch for’ benefit which featured heavily before the boom years.

If you've been asked to be a guarantor for someone, then you’ll have to fit into set criteria depending on the company your friend/relative is applying to. Usually guarantors need to have a decent credit history, must have enough income to pay back the loan in question (while this is rare, it does sometimes happen) and will ideally trust the borrower to pay back the loan on their own. Many guarantor lenders require the guarantor to be a homeowner, but some lenders do offer tenant guarantor loans at a slightly higher rate of interest. 

Thursday 24 April 2014

Why do Guarantor Lenders Need to See Documents?

If you or if someone you know has applied for a guarantor loan recently, then you’ll have probably noticed that the lender needed to see some documents before processing the application. Many lenders will ask their applicants for some kind of evidence of who they are and what they earn, but this is not as common for lenders who advance money to those with a poor credit history.

The point of asking for documents is to provide some extra security for the lender, as well as the customer themselves. By being careful about who they lend to, guarantor loan providers are keeping on top of fraud and protecting their customers (both the borrower and the guarantor) against losses associated with this.

What might I be asked for?

When you apply, you’ll be asked to input your details like your name, address, salary and date of birth. These are the basic details that lenders need to ensure that you can A) pay back the loan you want and B) be checked with a credit reference agency. It’s important that the lender knows that the person applying is who they say they are, as otherwise identity fraud could be an issue. For this reason, you will probably be asked to provide a copy of your driving licence or passport so that they can verify that you are who you say you are. The same goes for the guarantor, as it’s paramount that the person agreeing to guarantee a loan knows what they’ve been signed up to.

You may also both be asked for a proof of income and bank statement. This proof of income could be as part of a wage slip or job contract. This is to make sure that you can afford to pay the loan instalments, and that your guarantor is also able to afford it if they have to step in. Most guarantor loan providers lend responsibly, which means that they ensure their customers can afford to pay back their loan without getting into further financial difficulty. The bank statement can help the lender check that you have enough left over after your essential expenses to afford the loan repayments.

How do I give them the documents?

You should never send original copies of your important and personal documents to a lender. Instead, you can make a copy by scanning it in and sending it via email, taking a clear picture and sending the image from your phone or some lenders will also accept faxes. You may be able to post the copies of your documents also, which means there are plenty of ways in which you can provide the necessary evidence.

Different guarantor lenders may require different supporting documents, and each will have varying options as to how you can get them to the lender. If you’re unsure about what you need to provide, asking the lender then give them a ring. This can help to clear up any confusion, and it can also give you a good idea of their customer service.

Monday 7 April 2014

Comparing Loans For Bad Credit

If you have a poor credit history (or, if you’ve never borrowed before, no credit history at all) then you may find that getting a loan or other kind of cash advance from a bank or other mainstream lender is pretty difficult. This is because the lender needs to see that you have borrowed money and paid it back in full and on time in the past. This gives them a good idea of what you will be like to lend to, and whether they will get their money back or not!

Below we’ve listed the most common types of loans aimed at those who have bad credit histories. When searching for a loan it’s important to look at the pros and cons of each and to think about how the repayment terms fit in with your life.

Logbook Loans – APR 400+%

These loans are secured against the value of your car, motorbike or van, so for the duration of the loan, the lender will effectively ‘own’ your vehicle. You are allowed to keep using it as normal of course, but if you fail to make any of the repayments, it may be taken from you. Because the loan is effectively secured, your credit history may not be searched. This also means, however, that if you pay your loan back in full and on time, your credit history may not be updated either.

Instalment Loans – APR 300+%

Instalment loans are small loans (up to around £1000) which are paid back over a period of a few months. This allows people to borrow a small amount of cash but pay it back in more instalments, meaning that it’s easier to manage. Your credit history will be checked and your credit file will be affected by how you deal with the loan, so paying this back in full and on time should boost your score.

Guarantor Loans – APR 45+%

A guarantor loan can offer more in the way of lending amounts (up to £7,500) but requires a friend or family member to ‘back up’ the loan application, meaning that if you cannot pay, they will be liable to pay on your behalf. Once again, your credit history will be checked first and will be affected by the way you deal with the loan repayments. The repayment terms are between 1 and 5 years, meaning that a higher loan amount could be made more manageable for you.

Payday Loans – APR 1000+%

You have probably heard of payday loans as they have had a huge market presence in the last few years. These are small, short term loans (up to £1000) which are designed to be paid back by the time the borrower is next paid. This means that the full amount owed needs to be paid back at once, which can be tricky for some people. Your credit history may not be checked but a payday loan on your file will look bad to other lenders and could mean you find it hard to get credit in the future.

Monday 17 March 2014

3 Things Guarantor Loans Can’t Be Used For

Guarantor loans are building in popularity and now more and more people are realising just how they can be used to obtain higher amounts of credit, even if you have a poor credit history. The problem that many young people face is that they have no credit history at all, having never borrowed before, and this can mean that they get turned down for more mainstream lending, even if they’re really good with their money.

With a guarantor loan, you can borrow up to £10,000 from some lenders, although this is rare. You’re more commonly able to borrow up to £5,000 or £7,500 depending on the lender and your ability to repay. Of course, lower amounts starting at £500 are available too, so there’s a wide spectrum of possible borrowing which should be able to meet any needs you have. However, there are one or two restrictions on what you can spend your guarantor loan on, and a lender will not agree to advance you money if they think you are getting the loan for the following reasons.

Business Costs

If you own your own business and you need some money to buy equipment or as a start-up advance, then you should look into getting a proper business loan, rather than using a personal loan for this purpose. There are Peer-to-Peer business loans available out there, as well as specialist guarantor business advances, so always go down the appropriate channels if the money you borrow is going towards a venture. This is important because business loans carry different levels and types of risk than personal ones, so you could be putting both yourself and your guarantor in financial peril if something goes wrong.

Excessive Gambling

If it’s obvious that you have a gambling problem or if you simply want to put a lot of money down on a ‘sure bet’, then lenders will not agree to give you the money. This is because no gambling is 100% safe, and you could lose all of the money you borrowed in one fell swoop. Having a problem with gambling not only makes you look financially unstable in the eyes of the lender, but it also puts your potential guarantor at risk if you cannot repay the money back. It’s unlikely that you’ll make it to the pay-out stage of a guarantor loan if you have a genuine problem, but if you do, then please think twice about what you’re doing. If you’re concerned about your gambling then please visit http://www.gamcare.org.uk.

Crime

This may go without saying, but if you’re planning to use your guarantor loan to fund any crime or criminal activity then you will be turned down by the lender and your details may be passed on to the relevant authorities, depending on the problem. Some people will try to ‘recycle’ stolen money through loan companies to make it look legitimate (this is called money laundering) and any sign that this is the reason for wanting a loan will be met with a turned down application.

Tuesday 11 March 2014

5 Steps to Getting a Guarantor Loan

Introduction

If you have a poor credit history then getting that much-needed finance without having to pay through the nose can be tough.Guarantor loans were launched with the intention of bridging the gap between the strict-criteria high street loans and the high interest short term options.

Throughout this article we are going to outline how to get a guarantor loan in five simple steps.

Educate yourself about the product

Too many people risk getting declined simply because they haven’t educated themselves about the loan product and how it works. Guarantor loan lenders are able to help those who have been turned down by their bank or mainstream lenders due to the support of a guarantor. The guarantor simply backs up the application and signs an agreement to say that they will make payments if the applicant ever fails to do so.

Decide upon your loan amount and term

Prior to looking for a guarantor it’s important that you have a good idea of the loan amount and term you require. The loan amount will be largely dependent on the purpose of the loan. For example, if you’re using the loan to fund the purchase of a new car then you need to find out exactly how much it’s going to cost you, if you’re using it for debt consolidation then calculate how much debt you need to pay off.

Having worked out exactly how much you need, you next need to make a decision regarding the term of the loan. The most suitable loan term for you will be largely dependent on your monthly repayment affordability. If your budget allows you to afford large monthly repayments then a shorter loan term will be the most cost effective and suitable option, however if your budget is tight then spreading the repayment over a longer term would be more appropriate. Using the loan sliders on a guarantor loan lenders website will help you to find the most suitable repayments for your budget.

Find a suitable guarantor

Your next job is finding someone suitable to stand as guarantor. Almost anyone can stand as guarantor however some lenders may not allow spouses or partners due to the fact that they are financially linked, in general, the majority of applicants choose to use their parents, siblings or friends. There are a few very important factors to consider when choosing a guarantor:

  • Trust: There needs to be a good mutual trust between yourself and your perspective guarantor.
  • Contact: It’s important that you and your prospective guarantor are in regular contact meaning if there were any problems, you know they’d be easily contactable via whatever means.
  • Understanding: There needs to be a good mutual understanding of each other’s finances. The guarantor needs to understand why you’re taking out the loan and why you've been unable to get a loan via your bank. You also need to be sure that they are financially ready for the responsibilities they are about to take on.

As you can see, it's important that your guarantor needs to be someone who is very close to you which is why parents are a very popular choice. Having satisfied yourself that the person in question meets each of these points, you now need to ensure that they meet the criteria of the lender. Each lender differs however generally they will require the guarantor to:

  • Be a UK homeowner (some lenders may accept tenants)
  • Have a good credit history
  • Be able to comfortably afford the repayments of the loan.

We understand that credit history and disposable income are not the type of things that regularly pop up in conversation which is why you need to have a conversation with your prospective guarantor.

Approach them about being guarantor

Having educated yourself about the product and decided upon the finer points of the agreement you are now in a good place to approach someone about being guarantor. While a telephone call may suffice, talking to the person face to face will give the conversation a much more personal feel.

When discussing the loan with the potential guarantor there are a few things you need to cover off:

  • Why you’re taking out the loan – you need to tell the guarantor exactly why you’re taking out the loan. You also need to explain why you've been unable to get a loan via your bank and how why you've chosen to go for a guarantor loan.
  • The responsibilities of being a guarantor – you need to discuss what their role is in the application process, what they need to fill in and sign and how their finances may be affected by being a guarantor.
  • How you intend on paying the loan back – you should make it clear that it is in your best intentions to make each and every one of the loan payments on time and in full. You should also explain that if you were ever struggling to make a payment you would contact them and let them know before the lender requested the payment.

The more you can cover off in this conversation, the more harmonious the loan will be. Providing the person in question is happy to stand as guarantor you are now ready to make an application.

Make your application

Each lender will have a slightly different application process however the majority will be based online. In order to make the application as swift and hassle free as possible it may be worth ensuring that you and your guarantor are present at the time you apply.

Having made an application it is likely that you’ll hear from the lender within a few hours. In some cases lenders will require some additional documentation however often they’ll be able to offer a decision very swiftly. If everything goes through there’ll be a good chance you’ll get your loan paid out the same day.

Friday 7 March 2014

4 Benefits of Guarantor Loans

There is no doubt that the word ‘loan’ has a negative connotation. It may derive from the fact that a loan is a type of debt, which again has a negative reputation. It should however be remembered that not all debt is bad debt, in fact; having some debt can help to improve your credit history and indeed your financial situation.

Since their rapid rise in popularity, guarantor loans have struggled to stay out of the media spotlight. In times, guarantor loans have been criticised for their interest rates, debt collection strategies and lending criteria. However, as we’re often told, you shouldn’t believe everything you read in the papers; especially as it’s often over-hyped and over exaggerated. Throughout this article we are going to aim to dispel any myths surrounding guarantor loans and outline 5 benefits of them.

1. A bad credit rating can be considered

Having bad credit can make it tough to get your hands on the credit you need. Having been turned by the low rate lenders, you may feel that short term credit like payday loans are the only option available.

If you can find a friend or family member to support your application, guarantor loan lenders may be able to help, at a fraction of the cost of payday loans.

2. Long term solution not a short term fix

Whereas other subprime loan types may only be to offer up to £2000, some guarantor loan lenders are now able to offer up to £10,000 which is repayable over a term of up to 6 years.

This makes guarantor loans a genuine long term solution to financial problems. For example, if your car breaks down, you may be tempted to take out a payday loan to fix it. However if the car is old and there’s a good chance it will break down it may prove more cost effective simply to buy a new one outright. By using a guarantor to fund the purchase of a new car you could save yourself money in the long run.

3. Quick and easy application

Historically, the guarantor loan application was paper-based and time-consuming. Nowadays the process is based online meaning it can take less than 15 minutes to complete.

Having received your application, lenders can then have a decision within the hour and providing the application goes through successfully you can have the funds in your bank the very same day that you apply.

4. They can help to improve your credit score

Having no credit history is almost as tough as having bad credit history these days. This is because lenders create predictions regarding future payment behavior which is based on your credit history. If lenders have no history to go by then they’ll be unable to make their predictions and will subsequently turn the application down.

Guarantor loans are a popular choice amongst those with no credit history. By proving that you are able to competently repay these loans you dramatically boost your chances of being approved for lower rate credit in the future.

Monday 24 February 2014

Guarantor Loans – Combining independence and security

Introduction

If you’re looking to borrow a few thousand pounds then there are a wide variety of options available to you. Firstly, there’s the 0% purchase credit card which allows you to spread the cost of a large purchase and pay no interest on the balance over an introductory time period of up to 18 months. Then there are loans; depending on your credit history you could find yourself eligible for a small personal loan via your bank, an instalment loan, a guarantor loan, a logbook loan or a peer to peer loan. Of course, there may also be the option of borrowing from a family member or friend; however this luxury won’t be available to everyone.

Establishing a good credit score

If, like many, you’re a young adult who is looking to establish a good credit score and prove yourself as a responsible borrower then simply borrowing from your parents is probably not going to interest you. However, having never been responsible for repaying a large credit commitment each month, taking out a loan may be something that you are anxious about. In this situation a guarantor loan may be the best option for you.

The guarantor loan product

Contrary to popular belief, guarantor loans are paid out in the borrowers name meaning it is primarily the borrower’s responsibility to repay it. What this also means is that providing you keep up with the repayments throughout the loan term, guarantor loans will help to improve your credit history. The great thing is, if you are ever unable to repay the loan, you have the support of a third party individual (often a family member or friend) to ensure that the payments are never missed and your credit history is unaffected. In this sense you could essentially say that guarantor loans offer the perfect blend of independence and security.

Can I get one?

Guarantor loans are often described as a ‘bad credit loan’ product which means they are suitable for both those with poor credit history and no credit history. As I outlined above, you will have to find someone to support your application and guarantee the monthly repayments. The guarantor must be a homeowner who has good credit history and is receiving a regular income. Anyone can stand as guarantor, although some lenders will be unable to accept a spouse or partner as guarantor due to the financial link. As long as you can find a suitable guarantor and can comfortably afford the scheduled repayments of the loan, you have a good chance of being approved.

How do I apply?

The vast majority of guarantor loan lenders will now be based online meaning there is very little paperwork involved in the process. Search engine results pages will be littered with brokers and comparison engines so to avoid any hassle, always try to apply with those who are direct lenders. Providing both you and the guarantor meet the criteria of the lender then the loan can be paid out the same day as you apply.

Read more of our articles to learn more about the guarantor loan process.

Friday 21 February 2014

Speeding up your Guarantor Loan Application

One of the great things about guarantor loans is their process speed. Providing everything goes smoothly most lenders will be able to pay the loan out the same day as you apply, however this will hinge on your ability to submit the relevant documentation swiftly and correctly at the first time of asking.

Obviously, each lender will have a different process however throughout this article we are going to discuss how you can speed up your guarantor loan application.

Do the calculations

One sure-fire way to slow down your application process is by changing your mind about the loan term or loan amount half way through. This is because when you change the details of the loan, both you and your guarantor will have to re-sign your relevant agreements. Before you even apply make sure you have calculated exactly how much you need and have stipulated your loan term to ensure that the repayments fit your affordability criteria.

Make sure your guarantor is suitable

One of the main stopping points in the guarantor loan process is when the lender carries out suitability checks on the guarantor. As I outlined, different lenders will have different criteria regarding the guarantor, however generally a guarantor must;

  1. Be a homeowner
  2. Have a good credit history
  3. Be in receipt of a regular income

Some lenders may also require the guarantor to be on the electoral roll at their current address or be in full time employment, but these are the general guidelines. If your guarantor fails to meet any of these criteria points then the lender will require you to find another guarantor which will simply slow down the process.

Be willing to provide additional documentation

The majority of checks in the guarantor loan process will be automated, however occasionally these checks will fail and the lender will require you to submit some supporting documents. This may include; proof of ID (such as a driving license or passport), proof of income (such as a bank statement or payslip) and/or proof of address (such as a utility bill).

There are various ways in which you can send these in including email, text or fax. By taking a picture of these on your smartphone as you apply, you can be confident that if you are asked to provide any of them you’ll always have them at hand.

Conclusion

It is inevitable that the lender will have to speak to both yourself and the guarantor over the phone at some point during the application process. So, make sure that you always have your phone on you, and you make the guarantor does the same. The easier the lender can contact you, the quicker the application can get paid out.

Thursday 20 February 2014

Been Turned Down For A Loan Or Credit Card?

According to some reports, someone is turned down for a credit card once every 7 seconds. As the economy starts getting back on its feet again, credit card companies are finding that applications are on the up, as people are no longer afraid to spend their cash (or indeed, the bank’s cash initially). We may have all settled into this idea a little too soon however, as the amount of people being declined is rising. This is because the credit card companies, as well as the banks and supermarkets, are still very wary about lending money. In other cases, credit companies are too eager to lend, causing issues with things like payday loans and doorstep loans that people may not be able to afford. If you want to borrow some money at the moment, but your credit rating isn’t the best, then you could find that the banks, supermarkets and credit card companies are unwilling to lend to you.

Research Your Options

If you’re sure that you want to borrow money for the right reasons, and you know that you can afford to pay back what you borrow, then it’s important not to give up on your credit hunt. Many people, once they’ve been turned down once or twice, fall into getting a payday loan for a small advance on what they want to buy, only to find that the loan is hard to manage. There are plenty of other options out there for those who have been turned down by the more mainstream lenders, and they don’t all have to be very expensive.

Consider Guarantor Loans

Guarantor loans may be a good option in this case. They’re an emerging kind of loan which used to be popular in the past and which is now coming to the fore once again as a responsible way of both lending and borrowing. With a guarantor loan, you get someone to co-sign your application, which means that they are vouching for you and giving you their support. If you cannot or do not pay the loan instalments, then they will be liable to pay in your place. All good guarantor lenders will perform an affordability check with you before paying you any money, so your guarantor should have no worries that the loan will slip through your fingers. As long as they trust you to pay, then your guarantor-applicant relationship should go without a hitch.

Understand The Contract

Before you sign on the dotted line, it’s important that you understand the contract that you’re signing. Read through it carefully with your guarantor if possible. If you have any questions about it, then contact the guarantor lender as they should be more than happy to answer your queries. This is a good way for you both the gage what the lender is like as a business; their customer service will be a good indication about what they’re like as a whole. If at any point you feel uncomfortable about it, then don’t sign. A loan is something you commit to for years, so it has to feel right.

Tuesday 18 February 2014

What Can Guarantor Loans Be Used For?

Guarantor loans are a unique type of personal loan that are designed for those who have been turned down by their bank. The fact that they are a type of personal loan means that they can be used for almost any purposes – providing it’s legal, of course!

Throughout this article we are going to discuss how guarantor loans can be used to help your financial situations, and outline when they perhaps shouldn't be used.

1. Debt consolidation

One of the most popular uses for guarantor loans is debt consolidation. Customers use the guarantor loan to pay off high interest credit card or payday loan debt. There are many benefits to doing this; firstly, having debt in multiple forms can be overwhelming. You may not be aware of when each payment is due and how much you need to pay meaning before you know it you've missed a payment and incurred late payment charges. By consolidating each item of credit with a guarantor loan you essentially organise your finances into one manageable monthly repayment.

2. Purchasing a car

There are many different ways of financing the purchase of a new car; hire purchase, personal loans, dealership financing and savings to name just a few. The problem is, very few of these options cater for those with a poor credit history or no credit history. Equally, in these tough financial times very few people have the savings at hand to cover the cost of a new car upfront.

Guarantor loans allow those with a less than perfect credit history to get the finance they need and spread the cost of their car. Generally, guarantor loan lenders will offer between £1000 and £5000 meaning they are probably better suited to used cars than new cars. Alternatively, if your old car is in desperate need of some costly repairs, taking out a guarantor loan to fund them could prove much cheaper than purchasing a new car.

3. A holiday

Everyday working life can be taxing which is why a much needed rest can be just what you need to get away from it all. Unfortunately though, the rising cost of living has meant that many have found themselves unable to afford the large upfront cost of a holiday, especially if they have a family to pay for as well.

Many use guarantor loans to help fund the upfront cost of the holiday, purchase some holiday essentials or help with spending money. By stipulating the loan term and amount to fit their monthly affordability they can then enjoy their holiday safe in knowledge that they won’t be out of pocket when they return.

Conclusion

There are many valid and responsible reasons for taking out a guarantor loan, there are also some very irresponsible reasons. Generally, lenders will not lend money for a purpose that they don’t deem to be irresponsible, these reasons may include; fueling a gambling habit, an unnecessary spending spree or extravagant gifts for loved ones. It is important that before you apply for a loan you ask yourself the questions; do I really need to take out a loan and am I going to leave myself in financial trouble as a result of taking out this loan? If you can confidently answer the first question yes and the second question no then go ahead and apply.

Monday 10 February 2014

The Responsibilities of Being a Guarantor

Introduction

There are many reasons why someone may get declined for a loan; it may be due to their credit history, age, income, residential status, the list goes on. Being declined can be demoralising, especially if you’re in desperate need of cash. Fortunately though all is not lost, there are now a number of options available that are specifically designed to help those who have been declined by their bank or mainstream lender.

How could guarantor loans help?

The guarantor loan is a unique type of loan that requires the back-up of a third party individual known as the guarantor. There are a lot of myths flying around regarding this type of loan and indeed the responsibilities of being a guarantor. Throughout this article we are going to debunk these myths and reveal the truth about being a guarantor.

The role of the guarantor

It should be emphasized that being a guarantor is a serious commitment, after all your main responsibility is to pay the loan if the borrower is unable to do so. Admittedly, if the borrower is able to keep up with the repayments throughout the loan term the guarantor will never be called on; but this shouldn't be your mind-set.

The lender themselves should always carry out an affordability check on you to ensure that (if you were ever required to do so) you could afford the repayment amount. Despite this, you need to be fully happy and comfortable that the repayments of the loan wouldn't ever impact your finances in a negative way.

Your relationship with the applicant

It is important that you have a good relationship with the applicant and you have a strong understanding of each other’s financial situation. As guarantor you should be clear regarding why the applicant needs the loan, what they are going to use the money for and how they plan to repay it. If you feel that the applicant is taken out the loan for a reason that they shouldn't (e.g. a spending splurge or an unnecessary expense) then don’t stand as guarantor.

If you do decide to stand as guarantor then you need to remain in constant contact with the applicant. Let them know that if they are having any problems they should contact you first rather than simply allowing the loan to fall into arrears. The last thing you want is to have a call from the lender requesting immediate payment.

Will it affect your credit?

Being a guarantor will not affect your credit history, the only way your credit history could be affected is if both you and the applicant fail to make the payment and a missed payment is reported to the credit reference agency. Consistent missed payment or failure to contact the lender could result in defaults or court orders which will dramatically impact your ability to get credit in the future.

To conclude

If you have been asked to be a guarantor then there are a number of factors that you need to take into consideration. Firstly, do you trust the applicant to keep up with the repayments? Secondly, could you comfortably afford the repayments if you were required to make them? And finally, if you fail to make the repayments are you aware of the impact that it could have on your finances?

Providing you can confidently answer these questions with ‘yes’ then being a guarantor shouldn't cause any problems for you, and could help your friend or family member to get the finance they need.