There are various reasons for taking out a loan but if you’ve got a bad credit rating or can’t prove you’ll be able to make repayments then actually getting one in your name can be almost impossible. That’s where guarantor loans come in handy.
Much like secured loans, a guarantor loan safeguards the amount lent against your guarantor rather than against your home. This makes them available to many people over 18 who can meet repayments, aren’t bankrupt, in an IVA or debt management plan. Ensure you check you are eligible for a guarantor loan by checking online against a providers list of qualifying factors.
Who You Should Ask
Pretty much anyone you know over the age of 25 can act as a guarantor, but some people are more likely to help achieve a successful application than others. Friends and family members in a stable financial position are best as they will know you well.
Opting for someone who is a homeowner rather than a tenant is advisable, especially if you need a large loan, as usually this allows a higher amount to be borrowed. You can’t ask your husband, wife or partner but it does need to be someone that understands and is willing to cough up if you can’t meet a repayment.
How You Should Ask
In person is always the best way to ask others for a favour, especially when it’s to do with money. This shows respect for the other party which is more likely to increase your chances. Only if there is someone who you think would be ideal but they live a long way away should you breach the subject over the phone.
The worst thing that can happen is the person says no. Have a few back-up options just in case. Create a plan to show how you intend to meet repayments and give them as many details as possible about their role and the lending company.
What to Do Next
If they say no then asking why is a good idea, as it may be that they just don’t understand how the loan works. Otherwise it is best to move on and try to find someone else who will be your guarantor.
For those who are happy to act as your guarantor the next step is to get them filling out an application form. Sit down with them to go through it and ensure everything is done accurately and then hopefully your guarantor loan will be approved.