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.
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