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Guarantor on a Personal Loan? 5 Risks You Need To Know About

Guarantor loans are highly sought after with fewer people having perfect credit. Unfortunately, a lot of lenders aren’t willing to take a risk on borrowers and that does call for guarantors. It’s frustrating because the borrower has every intention (and the ability) to repay the loan but the lender doesn’t see it that way, they only see the risk. That’s why there are so many in need of a guarantor loan. However, whether you’re happy to be a guarantor for someone you know, it’s still important to understand the risks associated with the loans.

You Accidentally Become a Co-Borrower Rather Than a Guarantor

While you might believe there’s no way an error could occur during the paperwork of the loan, think again. There have been occasions where a guarantor has been named as a co-borrower and that’s very different from a guarantor. Unfortunately, sometimes the problem lies in the small print; while other times it’s down to issues with the lender and the filling out of the loan application. It’s vital to know the risk so that you can hopefully avoid it! Loans with a guarantor may be risky for the guarantor more so than the actual borrower.

Your Credit Gets Ruined

Depending on what happens with the progression of the loan, and its repayments, there’s every possibility your credit could get ruined. How is that if the guarantor doesn’t get the money? Your name is associated with the loan and since you’ve guaranteed the loan will be repaid back, it’s on your head and your credit report! Guarantor loans are simple enough to apply for, but guarantors can often get the short end of the stick!

You’re stuck with Repayments after a Default

Let’s say your friend takes out three thousand dollars but after a few months they default on the loan and stop paying. When the borrower defaults, the guarantor is the one the lender’s going after. Why is that if they didn’t get any money? The guarantor signed onto guarantee payment and that means they’re liable for the repayment. Loans with a guarantor have risks like that, and it’s something which far too many guarantors aren’t aware of.

It’s Harder to Get Future Loan

Did you know it’s a lot tougher to be eligible for a loan in the future? Guarantor loans have that risk and it’s deeply frustrating when it prevents you getting a loan later on. If you wanted to get a loan you might have to go to a specialist lender instead of a standard lender. You might even need a guarantor! That’s a risk you have to know about when you plan to be a guarantor. See more.

You Have Fall Out With Friend

Let’s be honest, for the first couple of weeks, you don’t think twice about the loan but after a little while you start to get a few doubts creeping into your system. When the doubts creep in, you will probably badger your friends about the payment and that will lead to a fall out. Do you really want to fall out with your friend? You of course, do not want to fall out with the friend but it does happen, all because of the loan. When it comes to loans with a guarantor, there are risks with losing friends. You don’t want it but it’s a possibility.

Know the Risks

Acting as a guarantor can be a wonderful thing to do for a friend, and there may be many times when things go smoothly and without any issue. However, things don’t always go perfectly and that’s when things get out of control. You never can tell how a loan will progress or the friendship put at risk. That’s why you need to know about the risks so that you can make a careful decision about whether you’re happy to be a guarantor on guarantor loans.


Are Lending Clubs Better Than Banks

In recent times, there has been an alternative to traditional institutions like banks and credit unions. One of these alternatives is peer to peer lending platforms such as lending club and prosper work. This type of platform is particularly beneficial to those individuals with bad credit and may be unable to approach the bank for a loan. In this article, we would be looking at the main difference between lending clubs and banks especially as it relates to those with bad credit issues so that you can choose which one is right for you.

Banks

There are two types of loan that can be obtained from banks: secured and unsecured loan. An unsecured loan is usually for small borrowers, in this case, a fixed sum is given to the borrower and the loan is paid back over an agreed term, typically up to five years. The interest rate is fixed once the loan agreement has been signed. On the other hand, a secured loan is usually for larger for larger amounts. This is the reason it is usually secured to an asset. Secured loans are also payable over a fixed period of time and at a fixed interest rate. The main difference between a secured and unsecured loan is that you stand to lose your ‘asset’ if you fail to make repayments.

Lending Clubs

In some ways, lending clubs are not all that different from a bank. This is because you can borrow a fixed amount of money over a fixed term and at a fixed interest rate. However, unlike banks the money from lending clubs from your peers. Lending clubs have fewer overheads; this allows them to offer better terms and lower interest rates. This is a better deal for lenders as they will be able to enjoy better interest rates and tax-free interest if you decide to move your earnings into an Innovative Finance ISA. For those with bad credit issues, this can be a solid option. Learn more.

Lending Clubs vs. Bank Loans

In a lot of ways, lending clubs are better than bank loans. This is because they are more flexible and also offer better rates. For instance, lending clubs allow you to make overpayments or pay off the balance of your loan early; this allows you to save on interest. This is not the case with secured and unsecured loans in most instances. Payments are usually fixed and although you are allowed to pay back your loan early, you may have to pay a penalty in the form of interest. This is all well and good but may not be suitable for people with bad credit issues.

Approval time for loans from lending clubs is usually very fast. This is because a strong trust has been built among borrowers and investors which help investors to support borrowers with confidence. These lending clubs endeavor to fund loans at the earliest because of the strong partnership that has been built over time with investors. This is unlike what you would get with a bank that has a long approval process before you can get the loan eventually. Check out this site: https://www.trusttwo.co.uk/borrowing-from-us/advantages-of-a-trusttwo-guarantor-loan


How Crucial Are Guarantor Loans For People With Bad Credit?

Bad credit guarantor loans have become vastly popular in recent years and it’s easy to see why. Credit isn’t established overnight and even when you have decent credit established it takes one silly mistake to ruin it all. That is why so many people have trouble acquiring a loan. However, just because someone has bad credit it doesn’t make them a bad person. Many people with bad credit have fallen on hard times and it has caused a lot of trouble for them but is more than willing to pay their loans. Read on to find out how crucial a guarantor loan can be for those with poor credit.

Offers Them A Way to Be Accepted For a Loan

Guarantor loans have been dismissed for a number of years simply because people don’t like the idea of having to ask someone to act as a guarantor for a loan. It’s quite understandable but what you might not know is that when you have bad credit it’s going to be more than difficult to obtain a loan, any loan. When you have a loan with a guarantor it is a way to be accepted for a loan. Yes, you have to ask someone to be a guarantor but it can be worth asking them if it means getting accepted for the loan you really need.

Lenders Won’t Give Borrowers with Poor Credit a Lifeline

It’s unfortunate to say but when you have bad credit, it will be very difficult to obtain a loan. In truth, traditional lenders won’t give borrowers the time of day when they have poor credit, and even some poor credit lenders will be wary. However, with bad credit guarantor loans they can actually be a crucial lifeline to help those with bad credit obtain a loan. It can make a real difference to say the least and the best thing of all is that borrowers might have poor credit but they can still get a loan. If the guarantor has decent credit then there really shouldn’t be much trouble. See more.

Potentially Helping To Rebuild Credit

Trying to repair credit is very difficult to do but there are ways to rebuild it and that can prove just a crucial as repairing it. When you look at rebuilding your credit you can use a loan to help you do that. However, it’s important to stress you shouldn’t take out a loan with the sole purpose of rebuilding your credit but rather because you actually need it. Over the course of time, you can find you are able to establish some form of positive credit history and it will make all the difference in the world. Guarantor loans might not appeal to you at the best of times and yet they offer so much too so many. It’s something you should give a lot of thought over.

Bad Credit Guarantor Loans Can Help Those in Need

Loans are a big responsibility but at the same time they shouldn’t be dismissed just because there is bad credit. If you have the means to repay a loan and have a real need for one then it’s maybe time you looked into a bad credit guarantor loan. Yes, these might not appear ideal to all but they can help in a big way and should be given a lot of thought. Guarantor loans offer so much and they really are useful for those who aren’t eligible for a loan without someone to act as a guarantor. More details in site: https://www.trusttwo.co.uk/borrowing-from-us/advantages-of-a-trusttwo-guarantor-loan


The Good and Bad of Debt Consolidation Loan

The Good and Bad of Debt Consolidation Loan

Choosing loans with a guarantor can, in fact, be a very popular option for thousands and it’s easy to see why. However, what happens when you get into too much debt and struggle to make the payments? That can be a very worrying time and it’s usually the time when people start to look into the possibility of consolidation. Now, consolidation really is an interesting concept and it’s something which many really aren’t sure of. What are the good and bad of debt consolidation loans and will they work for you?

The Good: It Helps to Manage Debt

Let’s say you have four different loans that you were currently struggling to repay, the consolidation loan would help to ensure that instead of paying four different amounts per month, you pay one. All of the loans are being paid, however, but now it’s just in the form of one monthly and manageable payment. That can help to keep things simple and more manageable and nothing is being missed out. It will help most people who have several debts who are also struggling to make the current payments sort out a more manageable solution. Guarantor loans can also be added to the list and it’s great to say the least. Choosing debt consolidation loans can help manage your debts more easily.You can apply for guarantor loan at https://www.trusttwo.co.uk/

The Good and Bad of Debt Consolidation Loan

The Bad: it’s not without its Risks

People often think once they have consolidated their debts then that’s it and they have nothing else to worry about—but that’s really not the case. When you choose a consolidation loan, you are going to find it impacts the credit. Now, if your credit wasn’t bad before it might be that way soon. That doesn’t mean to say the loans don’t have their good points because they do but they also have some negatives and one is it might mess up your credit. Of course, if your credit is really decent then it might only impact it slightly but if it’s very poor, it’s not going to do it much good. It’s something you should think about when thinking about loans with a guarantor, click here to read more information about top guarantor loans. Consolidation is always a risk, even if you need it most.

 What’s best for You?

Are you seriously struggling to keep up with the monthly repayments of your debts? Are you at the bottom of the barrel and have no way to turn? Are you able to pay your rent and put food on the table as well as pay the debts? For most people, debt consolidation loans are the last straw and the only solution really available to them. You have to remember, you cannot go into this decision lightly as they can impact your entire future. However, if you are truly unable to pay your loans and are worried about the impact, you might need to consolidate. It would be wise to talk to a professional financial advisor and find out which route is best to take. Guarantor loans might seem good now but they might not help either.

Do What’s Best

It’s easy to say consolidation loans have good and bad points but what can they do for you? Are they really the best avenue for you? You have to absolutely think carefully about where you are financially and how you are going to be able to make the next payments. It’s very important to ensure you choose the option which not only works for you but is suitable from start to finish. Loans with a guarantor might appeal to you but will they really help your debts?