7 Tips to Take Out a Guarantor Loan
September 8, 2018
If you have a bad credit score but want to borrow some money, we suggest you review a guarantor loan. But it can be difficult to obtain one even if you have a guarantor. You cannot say with certainty that you will get the loan. Here are some tips that can help you improve your chances of getting the loan.
- Find a Good Guarantor
Note that the guarantor will function as additional security for the bank. If the main borrower cannot make the payments, the bank will ask the guarantor to make the payments. As a result, you may want to ensure that the guarantor has a good credit rating.
- Make Payments on Time
Remember: if you have a guarantor, it does not mean you can get the loan no matter what. The bank will continue to look at your credit rating to have an idea of whether you can repay the loan in a timely manner. In fact, the amount should be within 1/10 of your monthly salary. This can help the bank make the ideal deal.
- Know the Risks
We suggest that you let the guarantor identify the related both risks and responsibilities. Who can be the guarantor? The guarantor can be anybody, such as your friend, father, brother or someone else.
- Apply Directly
If you are going to get the loan through a broker, you may have to pay the additional charges for the service. You don’t want to pay for the needless expenditure. What you can do is go directly to the lender to avoid other expenses.
- Choose the Lender Carefully
There is no doubt that you should not choose any lender. It is a great idea to ask for quotes from several lenders. This can help you choose the best lender to whom you can apply for a loan. But when you have a bad credit rating, your guarantor will provide you the opportunity to borrow from the lender.
- Understand the Consequences
You may want to remember that if you cannot repay the loan; your credit rating will be affected. The total charge will not fall on you because you have a guarantor involved, but the qualification will be reflected in your documents. Whether you already have a bad credit rating, it will be harder for you to obtain a guarantor loan in the future. Apart from this, it will be even harder to find an excellent guarantor.
- Keep in Touch
We suggest that you keep the guarantor updated on the troubles you have with the payments. As a matter of fact, the lender and the guarantor will appreciate it if you let them know of the problems that you may have. They can help you deal with issues.
These are not the only things you should consider when applying for a guarantor loan. You can find other smart offers depending on the circumstances in which you are. What you may want to do is review the terms and conditions thoroughly before signing the documents.