Guarantor Loans for Those with Poor Credit Histories

Applying for loan is a difficult process at the best of times, but when you know that you have a poor credit history it can be even tougher to get the capital you need to solve your financial woes. Being turned down by a bank or lender is often devastating, especially when you’re reliant on that money to clear your credit card bills or to pay your rent or a deposit on a house or car.

Unfortunately, poor credit histories can affect us for a long time. Some lenders will be able to access information about one late payment from years ago that can drastically affect your chances of being approved for a loan leaving you back at square one, searching for any source of income or being approved for a loan.

Fortunately there is a way of improving your chances of getting the cash you need and that is in the form of a new style of loan called a guarantor loan. These can help customers to pay for expensive investments like new cars or home improvements priced between £1,000 and £10,000 usually, with payments spread across anything from twelve months to five years in most cases.

Lenders like www.buddyloans.com look into applications from potential customers and – this is where the guarantor loan varies from your more traditional forms of lending – require a second name and signature to be put on the agreement to pick up the payments in the event that the customer can’t make them for any reason.

Having a guarantor on the agreement is essentially an endorsement saying that the person can be trusted to make their repayments, and if they can’t, then the other person will. It guarantees that the lender will get their money back on time without having to sell of the customer’s assets until the money is returned in full.

The guarantor tends to be someone close to the borrower, usually a close friend or a family member, who can be trusted to make the repayments. Lenders tend to look favourably on guarantors with excellent credit ratings combined with the ownership of their own home or cars, showing that they’re reliable and trustworthy people who would “pick up the tab” if necessary.

It is worth bearing in mind, however, that before you ask someone to be your guarantor, you consider how likely it is that you will be able to make the payments yourself. Just because someone else is on the agreement doesn’t mean that they should make the repayments, it just means that they will help you if you can’t for whatever reason; like losing a job or in the case of an emergency.

Experts from the financial industry have stated that guarantor loans can be the solution to problems for those with poor credit histories or those with no history of borrowing, having also noted that the significantly lower APR compared to other types of loans make them more affordable and manageable.