How guarantor loans work

Screen Shot 2016-02-12 at 15.39.12Guarantor loans are made so somebody else can guarantee for the loan that you borrowed from the bank, company, lender. The main thing that makes it apart from other loan systems is that there needs to be a guarantor for you. Guarantor is a person who trusts you, the guarantor can be someone close to you maybe your family member or close friend, the goal of this loan system is that the guarantor can guarantee for you that you can repay the loan that you borrowed.

Guarantor mortgages are popular with young borrowers who don’t have a large amount of money in their deposit, and are interested in purchasing new properties, in most cases their parents are the guarantors for them, their parents are there to back them up as guarantors if any problem occurs.

In the process of making a guarantor loan, you need to cover up some basic criteria to become a borrower. You need to be 18 years and older, you need to be a resident in the United Kingdom, to have some kind of income that can provide you the money to repay the loan that you borrowed, and a bank record in the United Kingdom. If you have a bad credit history or no credit history at all that is not the problem.

Guarantor loan is unsecured loan and it requires the borrower to have a guarantor for himself in order to make the guarantor loan. Loans last from 1 to 5 years depending on the sum that you borrowed and generally you can borrow from £ 1,000 to £ 15,000 depending on how much money you need. By making an agreement and sealing the deal between the borrower, guarantor and the company, the deal is made. But anyhow not everyone can be a guarantor, the borrower guarantor needs to be a person who trusts the borrower completely, because if the borrower is not in the position to pay off the loan, then the guarantor needs to pay instead. It is a risky and a difficult job to be a guarantor for somebody if you don’t trust them.

Guarantor loans can be secured and unsecured, companies like offer both. The difference between these two are that with secured loans you can borrow larger sum of money but you need to be able to guarantee with some kind of your property that is worth the same as the amount of money that you borrowed, your property can be a car, your house and other valuable things that you possess, if you are not able to repay the loan in the arranged and agreed period of time you can lose your property that you have put on the deal for borrowing the loan.

Unsecured loans are better for use, but you can take a lot smaller sum of money than you could with the secured loans, with unsecured loans you don’t have to put any owned property that you possess but you have to guarantee that you will repay the loan that you borrowed.