A Brief Guide to Guarantor Loans.

Are you contemplating taking out a guarantor loan, or are you considering becoming a guarantor yourself? If the answer is yes, then take a look at our guide.

Getting a loan can be a difficult for a lot of people, especially those who have a bad credit history, or those that have no credit history whatsoever; this is where a guarantor loan could provide the answer.

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Unsecured Loans up to £25,000

Whatever your circumstances

What is a guarantor loan?

A guarantor loan is an unsecured loan, the borrower requires a co-signer to act as their guarantor.

The term of the loan is usually between 1 to 7 years and you can lend from £500 to £15,000.

Guarantor loans have been around for many years, prior to credit scoring being introduced, it was how the banks used to lend money and is based completely on trust.

Even with the introduction of credit scoring, it is not uncommon for a private landlord or mortgage company to ask for a guarantor.

Is a guarantor loan right for me?

If you are having problems obtaining a loan through conventional methods, as an example you may have a bad credit history and have been turned down by your bank or other mainstream lenders, then a guarantor loan could be for you.

With a guarantor loan, you can usually borrow a higher amount than if you were to get a loan by yourself as having bad credit will impact on the loan amount and APR.

Who can act as a guarantor?

A guarantor can be anybody who is not connected to you financially, for example, your spouse would not be allowed to act as a guarantor. However, other family members, friends or even co-workers can.

You will need to bear in mind the criteria for which a guarantor is likely to be accepted. Normally, the guarantor will need to be over 21, have a good credit history and also be a UK homeowner.

Some guarantor lenders will also accept non homeowners who have an excellent credit history as the loans are not secured.

Your guarantor will need to undertake standard credit checks, they will be required to provided bank statements, bank details and ID.

APR will differ from lender to lender; typically the APR varies from 39.9% to 59.9%, this is depending on the applicant’s credit worthiness.

If you do not keep up repayments on the loan, the guarantor will be required to pay on your behalf.

You will be pursued for the full outstanding loan amount and interest.

Amigo Loans, UK Credit Ltd, TFS Loans, TrustTwo and Bamboo Loans or some of the more well-known guarantor loan lenders.

Advantages

  • Friends or family may act as a guarantor (preferably a homeowner).
  • You may have a better chance of being accepted for a loan if you can provide a guarantor.
  • Ideal if you are looking to borrow small amounts over a short term.
  • Flexible lending options available based on your individual circumstances.
  • No requirement to secure the loan against your home or property.
  • You will usually have the option to repay your loan early if needed.

Disadvantages

  • Your guarantor will be required to make payment should you default on the agreed repayments.
  • It is not ideal to take out a guarantor loan if you have several existing debts. Taking too many forms of credit may cause you financial difficulty.
  • This type of loan is not ideal if you are looking to borrow high loan amounts.

Loans up to £25,000

Whatever your circumstances

  • Loans up to £25,000
  • Loans for any purpose
  • No complicated forms
  • No 'Up-Front' fees

44.9% APR representative (unsecured)

Representative Example:
Borrowing £4,500 over 60 months. Repaying £167.63 per month. Total repayable £10,057.50. Annual interest rate is 44.9% fixed.

WARNING - LATE REPAYMENTS CAN CAUSE YOU SERIOUS MONEY PROBLEMS. FOR HELP GO TO WWW.MONEYADVICESERVICE.ORG.UK

Amigo Loans Bamboo Finance UK Credit TFS Loans Trust Two

*Unsecured loans are available to a maximum of £25,000. Loans of up to £100,000 may
be offered by the lenders subject to affordability and secured against your property.
Typical Example for illustration purposes only: £25,000 over 10 years with 7.8% APR, Total to repay: £35,664, Monthly Repayment: £297.20.
Overall cost for comparison is 5.5% APR typical. Overall cost for comparison for unsecured loans is 22.1% APR typical.
Unsecured Loan Typical Example for illustration purposes only: Borrowing £4500 over 60 months. Repaying £167.63 per month.
Total repayable £10,057.50. Annual Interest Rate of 44.9% fixed.

This article is intended to provide information only, and does not constitute financial advice or assistance, without limitation, warranties as to satisfactory quality, fitness for purpose, accuracy or skill. The information contained in this article is generic and non-specific to your own individual circumstances or anyone else.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

WARNING - LATE REPAYMENTS CAN CAUSE YOU SERIOUS MONEY PROBLEMS. FOR HELP GO TO:

The Money Advice Service

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