Personal Guarantor Loans

You may not have gotten that loan you’ve always applied for because of your poor credit history. To pull through the application process one more time, try the personal guarantor loan not minding the exigencies.

There has to be some underground work put in place so you don’t lose out or risk future chances of getting a financial boost from lenders.

Read on as this article provides you with everything you need to know about personal guarantor loans.

What is a Personal Guarantor Loan?

This is the kind of loan where someone stands as a surety to a borrower.

If the person borrowing doesn’t meet up to terms of repayment as at when due, the guarantor will be the one to stand in for him and eventually clears off the loan debt.

A guarantor isn’t just anyone. He or she must be someone really close. Preferably, a close acquaintance or family member who doesn’t have a financial link to you.

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How does Personal Guarantor Loan Work?

Basically, personal guarantor loans are sought to boost new and small businesses.

Before a business owner can access this, you must present a personal guarantee who in turn, provides his credit history as part of the loan application.

Also, details as the Social Security Number (SSN) and employer Identification Number (EIN) are required to make an inquiry about the applicant’s income.

So, you have to be very careful while applying for one.

Personal Guarantor Loan Pros and Cons

Basically, a personal guarantor loan allows you who has poor credit history to get a loan.

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To build your credit reputation, you can do well to stick to the repayment schedule to erase whatever history you have with funds mismanagement in the past.

Pros

  • It gives you access to get loans
  • The interest rates are lower than short-term loans and payday loans
  • They are generally available.

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Cons

  • The borrower’s inability to repay the funds could cause financial and mental stress
  • Whether or not the guarantor’s financial status dwindles, they must repay the loan if the borrower defaults
  • If both the borrower and the guarantor defaults in making repayment, the essence of growing a trustworthy credit score is defeated.

Tips on How to Get a Personal Guarantor Loan

  • Look out for a guarantor who is to support your loan application
  • Make a reasonable comparison between guarantor loans
  • Make sure you qualify for the loan requirements
  • Conduct a checks and balances system on your credit score
  • Finally, apply for a personal guarantor loan.

What are the Eligibility Criteria for Becoming a Guarantor?

To get someone to stand in for you as a loan guarantor, you must ensure they meet up to the following requirements.

  • Your guarantor must have maintained an excellent credit history
  • He or she must meet the lender’s requirements
  • Have a UK address
  • Have an account balance that can cover your debts even if you can’t.
  • Must be above 21.

How Much Can I Borrow?

How much you can borrow depends on your financial status. First, your credit history is put into consideration and that of your guarantor too.

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You may get less than what you request if the lender considers you and your guarantor risky borrowers.

Final Thoughts

While it is important that you get that loan to boost your business, it is also more important that you read every part of the loan agreement before stamping your signing on those papers.

Be well aware of the risks involved, so it doesn’t destroy your credit history the more.

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