There are three basic types of loan – secured, unsecured and guarantor loans.
When a lender is deciding whether or not to give you a secured or unsecured loan, they will look at your credit profile, payment history, etc and use this to make a decision. This is great for people who have a long history of managing their own finances well, but is less than ideal for anyone with a poor credit history, or no history at all.
A guarantor loan basically means that instead of making a lending decision on your financial background, the lender will ask you to find someone to vouch for you and accept the responsibility of paying the loan back if you end up not being able to.
Guarantors are usually family members or very close and trusted friends, someone who is willing to take on some financial responsibility on your behalf. They will need to go through some quick vetting checks before your loan is confirmed and finalised.
One of the major benefits of a guarantor loan is that it will help you build (or rebuild) a good credit rating. As you keep up with your loan repayments, this gets reported back to UK credit agencies and counts as a positive in your overall report.
The lender on our panel that offers guarantor loans is Amigo Loans. They have won the MoneyNet Award for Best Credit Builder for 4 years running, and have this to say about their lending approach:
“It doesn’t matter if you have bad credit, are self-employed, or even if you’re currently unemployed – the most important thing for us is that you have a friend or family member who trusts you enough to guarantee to make repayments if you don’t, and that you can afford to repay the loan. Before we pay out any guarantor loans, we have a good old fashioned chat over the phone with both you and your guarantor. We base our decisions on simple common sense.”
If you have any further questions or concerns about taking on a guarantor loan, please don’t hesitate to contact our LiveChat team or talk to Amigo Loans directly on 01202 629 200 or at [email protected]