Last post: Oct 20, 2017
A successful guarantor loan is a loan taken on by a creditor and a guarantor who fully understand the product they're working with. An informed creditor is more likely to meet repayments and an informed guarantor is more likely to feel comfortable and secure with the process. So what do they need to know?
As a borrower seeking finance via a guarantor loan, it's your responsibility to know exactly what your loan entails and how it all works. It's also up to you to give your would-be guarantor all the information they need to feel comfortable enough to proceed with the process.
While your lender will provide lots of information and documents clearly outlining the facts and figures, when you first approach a guarantor they'll almost certainly have lots of questions which you'll need to field. The more effectively you can answer their questions, the more likely they are to see that you have taken the process seriously and agree to support your application.
So what are the important, lesser-known facts your potential guarantor should know?
1. Guarantor loans are usually affordability checked
Any good, accredited lender won't offer a guarantor loan unless the borrower can afford to repay the whole amount – even if the guarantor can cover the cost of an unpaid loan. Affordability checks are conducted when finance applications are made, ensuring would-be creditors have the income and financial stability to repay their loan.
2. Guarantor loans can affect the guarantor's credit record
Many people considering acting as guarantors will be concerned about the potential impact on their credit record, if repayments are missed. If you fail to meet a repayment, your guarantor's credit report will not be affected, however, if they fail to make repayments which fall to them (should you default) their report will be impacted.
3. Guarantors cannot be financially linked to you
If you're considering asking somebody close to you to be your guarantor, it's important to bear in mind that your guarantor cannot be financially linked to you in any way. That means that you cannot share bank accounts, a mortgage or have any other financial ties.
Do you have more questions about what is required of a guarantor? We can help. Our specialist team can provide answers and connect you with a guarantor loan which works for you.
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