A guarantor loan is an unsecured loan which requires a guarantor to co-sign the credit agreement, allowing you to take out a loan even with a poor credit history.
For those customers who do have a bad credit rating and struggle to receive a loan, then a guarantor loan is ideal as it will allow you to gain access to loans with interest rates that are not through the roof because a second person (guarantor) will agree to pay back the loan if the borrower can’t.
Typically, a guarantor will be a homeowner aged between 18 and 75, who has a good credit rating and pays their bills without trouble. Guarantors are normally friends or family who can be relied on to afford your payments if you fall into difficulty.Loans for people with bad credit still require the borrower to ensure they can afford the repayments and all customers must be over the age of 18 and hold a UK bank account.
Lenders can offer guarantor loans that stretch over terms ranging from one to five years with borrowing amounts between £500 to £5000. Guarantor loans are not payday loans and offer much lower interest rates – typically around 49% APR – without up- front charges or arrangement fees.
For borrowers who have previously been rejected by lenders due to poor credit, a guarantor loan could be an ideal solution, offering affordable interest rates and no set up fees. Due to the security provided by the guarantor, these loans will allow you to borrow larger amounts whilst allowing you to rebuild your credit score by demonstrating that you can borrow responsibly and make timely repayments.
Guarantor loans will not be the right financial option for all borrowers, however, they do provide an accessible alternative to other high interest loans and offer customers with bad credit the chance to borrow cash when they need it.