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Personal

Guarantor

Loans

N Whole of Market panel
N Trusted panel of lenders
N From £1,000 to £10,000*
N Rates from 49.7% APR
N 12-60 month repayment

Short Term

Guarantor

Loans

N Online decision
N Responsible lenders
N Borrow up to £1,000
N Rates from 49.7% APR
N 1-12 month repayment

Representative example: £500 borrowed for 5 months. Total amount repayable is £991.85 in 5 monthly instalments of £198.37. Interest charged is £491.85, interest rate 236.1% pa (variable). Representative 481.6% APR.

What Is A Guarantor Loan?


A guarantor loan is not a no credit check product. This is a type of unsecured loan whereby a third party will co-sign the agreement under the understanding that they agree to pay off the debt, should the borrower default on their agreed payments.
The way this works then, is that you might take out a loan and then ask someone you can trust and who has a good credit rating, to sign as a guarantor. This way, if you fail to make a repayment, then your friend or guardian will pay it for you and that way, you will not miss any repayments.
Don’t want a guarantor? Not a problem even with bad credit you can get the finance you seek with no credit checks loans.

Guarantor loans are a relatively new addition to the loans market but the concept of a ‘guarantor’ is not. Guarantors have historically been used in a number of other financial agreements, for example in tenancy agreements. Here, a guarantor might agree to pay your rent if you should fail to make the payment in a month.

This has become an increasingly popular alternative to payday loans or any other type of personal loan that which require a security or a good credit score.If you feel you will be able to get accepted for a loan without a guarantor then you do not need to apply for a guarantor loan.

Guarantor loans are a relatively new addition to the loans market but the concept of a ‘guarantor’ is not. Guarantors have historically been used in a number of other financial agreements, for example in tenancy agreements. Here, a guarantor might agree to pay your rent if you should fail to make the payment in a month.

Guarantor loans become an increasingly popular alternative to payday and short term loans.

Getting competitive rates with a poor credit score is difficult and that is where guarantor loans come into the picture. A guarantor can help you up your chances to getting the funding you need even with a bad credit reputation. You can even get much lower interest rates at the maximum amount depending on your guarantor’s credit status. While it actually poses some risk on the guarantor’s part, make sure that he or she understands the risks involved. The thing is – borrowing some cash can actually help rebuild your credit file if you handle repayments well and on time. You should then gradually build up your credit reputation and increase your chances of borrowing again and again at higher amounts and on more flexible and attractive terms than you’ve had with a bad credit.

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How Guarantor Loans Work

So why would you choose a guarantor loan? Who is this type of loan for?

To understand the benefits of a guarantor loan, it can help to understand a little more about how loans work in general. Specifically, it’s important to realize that the APR of a loan is often based on the risk that the borrower is thought to represent to the lender.
In this sense, you can consider a borrower to be much like a stock or a share. The idea is that the bank or lending company will invest money in the borrower by giving them the loan but then in theory, they should make a profit on that investment when the borrower pays it back with interest.
But if the borrower can’t afford to repay the loan and ends up going bankrupt, then the bank will have lost out. Just like any type of investment, there is inherent risk.
The riskiness of a borrower will be based on many factors but the most important one is the credit history. If a borrower has never taken out a loan before, then they might be considered a risk because they have no track record. Similarly though, if the borrower has taken out a loan and defaulted on numerous repayments or been bankrupt, then they will be considered even more of a risk.
This then prompts the lender to charge a higher percentage rate in order to mitigate the risk. The idea being that they’ll now be earning more from the borrowers per month, thereby increasing overall profits in order to soak up the losses incurred by customers that default on loans.
So why would you choose a guarantor loan? Who is this type of loan for?

A guarantor loan is similar to the way a borrower asks a lender for money but the only difference is that there is someone else involved who ‘guarantees’ to cover the cost of the loan if the borrower defaults.

The person who acts as the guarantor is usually a family member, friend or colleague. It cannot be someone you are financially linked to, like a spouse. This person usually has a close relationship with the borrower and has an understanding of their current financial situation. The guarantor must have full consent before agreeing to be involved in the loan agreement. They will be responsible to cover the cost of the loan so it is important that the guarantor is also in a financial position to repay the loan if the borrower is unable to do so.

A good guarantor to have is someone with a good credit history and a good track record of paying other credit cards and loans. The lender feels that having a guarantor with good credit to cover the borrower’s repayment poses little risk. For this reason, borrowers that have guarantors with good credit ratings are far more likely to be accepted.

Whats the Difference between a Payday Loan and a guarantor loan?

This is a very common question when it comes to this type of product, but in reality the two types of finance couldn’t be further from each other.
One is designed to be a short term solution designed to cover a hole in a wage package normally due to sickness or some unexpected issue.
The other is designed to be spread over a longer term and would normally be for higher amounts, e.g. £1000 to £10000. This is why there is another person added to the agreement. This is so the lender feels more confident about lending such a larger sum of money as your previous credit history was poor. If you think that a short term fix is more appropriate for your circumstances then it may be beneficial to look at our bad credit payday loansapplying for a short term or payday loan. Alternatively if you want long term loans and don’t think a guarantor is right for you then Monevo may still able to help you as they have many different lenders that cater for all kinds of customers.
The process from start to finish couldn’t be any easier… first step is to fill out your details on our application form. The details you put in are then measured against Monevo’s lender’s criteria. You will then be processed and passed to the lender that best suits your needs, this is where your need to add the third party details our application process takes on average about 90 seconds we make it very simple.

What Checks Will be Carried Out?

This will depend on the financier themselves but as a general rule all will check your past credit history 99% of people that apply for this type of money have poor credit so its to be expected so dont panic! this is why you are guaranteeing the monthly payment using a third party the lender as a general rule will want to speak with both parties and do an income and expenditure for both parties to make sure there not putting anyone under strain with these payments. On some occasions the finance company may pay the loan out into the third parties bank account this is to make sure nothing untoward has happened through out the application it protects them and the third party. All banks or private lenders must follow a code of practise this is found here www.fca.org.uk if you ever have any problems with them you are well within your rights to report them here and they will deal with any issue.Many guarantor lenders will complete a full credit check on the borrower once they have signed their credit agreement. They may do a full check on the guarantor’s credit file, or they may do a soft search or ‘quotation search’. If you are unsure and you’re thinking of applying for a guarantor loan and have a guarantor in mind, it is always best to check so that the guarantor is aware of the potential effect this might have on his/her credit standing.
Most lenders will check to confirm the borrower isn’t bankrupt or on an IVA. They will also check that the guarantor hasn’t had trouble paying bills in the past.

FAQ

Please see below for common questions in relation to Guarantor Loans.

  • Can I settle my loan early?
    You will need to check this with your lender directly, however there should be no reason why you can’t. Please be aware that some lenders may charge you an early redemption fee for doing so, so it is always best to check the terms and conditions of your loan agreement or by speaking to your lender directly.
  • I have bad Credit!What if I have poor credit?
    Don’t worry bad credit is very much what this product is designed for, this is why there is a third party on the agreement with you there whole role is to guarantee the monthly instalments this gives the finance company confidence that the monthly payments will be met without an issue.Guarantor loans cater for people who either have a damaged credit file due to missed or late payments, or for those who are new to credit and do not have any information for the lender or provider to refer to.
  •  Will I get credit checked?
    This falls inline with the question above but the short answer is yes, does the score matter? Not really this is why you have a third person on the agreement as you already new you had a poor past history. So, Yes in most instances, even though you are using a guarantor, the lender will still complete a credit check on you. The information provided to a lender by a credit reference agency is used as one of the many important types of information to help us understand your individual financial circumstances. Your credit file is an important indicator of your financial circumstances.
  •  How long does it take.
    This will depend on your chosen lender and their processes however normally your loan will be paid out within 24-48 hours of your guarantor being accepted.

How Do You Work?

We try to keep the whole process as simple as humanly possible for you, as i said before our application process is refined and only takes a couple of minutes from start to finish. The panel of lenders is constantly checked and refined to make sure you are only seeing the best products in the market if the provider has problems with there service or there rates are to high we will not be putting you forward to them. There would be no point passing you to someone that would just decline your application before having a good look into your app properly especially with this type of product, sadly this used to be a major issue but not any more all our lenders will review your application before making a decision.
We work with Monevo, who’s technology we use to match you to a suitable lender. Monevo in turn work directly with lenders. We introduce to Monevo and Monevo introduce you to lenders and brokers for the purpose of obtaining a loan.

Monevo are constantly checking and refining their lender panel to ensure the number of reputable lenders who can potentially lend to you is growing, to ensure customer satisfaction.

Our site is completely free to use and we will never charge you a fee for using our service. Our website is on an secure server (https) which adds an extra level of encryption so that your data and cookies are extra safe. We are pleased that you have chosen our website and hope that you can use our introducer service efficiently to find the right loan for you.

Who Could Be A Guarantor?


Guarantor type of loans is said to be less problematic as compared to other personal or payday loans. It’s very flexible and you can get the maximum amount you need provided that your guarantor is worth the credit line. You will also not be subjected to any credit checks and at almost 100% approval every time. Finding a guarantor is obviously one of the most crucial parts of the whole application process. It’s important to find the best person possible to guarantee your payments as without a good guarantor, you may struggle to get this type of loan. This is because this type of finance is geared around the 3rd party on the agreement having a good past credit history as yours isn’t quite as good. Yes, with this type of loan, lenders do not care less if you have poor credit score just as long as you have a guarantor with good credit reputation and financial standing. This is why even with poor credit you can still borrow up to £10,000. This wouldn’t be possible in any other type of finance.A guarantor can be anyone you know and trust, with good credit standing, and a good track record of paying their bills and credit agreements on time.

It could be a friend, relative, or work colleague. It cannot be someone you are already financially linked with, such as spouse, or anyone you have a joint mortgage or bank account with, for example.

Family Member, Friend In College?

Asking someone to be a guarantor is always a matter of trust and confidence in relationships. Practically anyone can be a guarantor but this should be someone you are personally and professionally connected with. You may have a joint account or could be workmates but lenders must also ascertain for a fact that the guarantor would not have any qualms or difficulty in paying debt or that this credit agreement wouldn’t put you both in financial strain.Asking someone to be a guarantor is always a matter of trust. You need to be confident that they can step in should you no longer be able to maintain your contractual repayments. Many individuals can be a guarantor but this should be someone you are personally and professionally connected with, however you cannot be financially linked with them.

For obvious reasons, someone you just met casually or let alone, a total stranger, couldn’t be a guarantor. This is obviously a responsibility for someone to take on so it would not be suitable for someone you barely know.

It needs to be someone you trust and who will be happy to help and step in to make the payments should you have problems.

It can even be your partner as long as they can afford it and will guarantee your payments, but not if they are financially linked with you in any way. For example, you cannot have a joint account or joint mortgage together or be living together. For this reason, a family friend, relative or work colleague may make a better guarantor.

How Does This Affect You?Can a guarantor be self employed?

This is a befitting scenario for borrowers who have poor credit score. This definitely creates an opportunity for you to be able to improve or boost your credit score. This whole process has two benefits obviously. You get the money you need but it will also help you improve you credit file on a monthly basis. This will improve your score each time you or the third party make the installments. So, making sure that you pay right on time will make it worth it in the end. Hopefully, by the time the agreement has been settled, your score would have improved enough for you to be able to get the required finance you’re after without the need for a guarantor to guarantee or vouch for your monthly payments.This will depend on your chosen lender as each may have different criteria, however generally speaking your guarantor can be self employed as long as they are aged 18-75, haven’t had any trouble paying their bills in the past and are able to make the loan payments if you do not.

Who Can’t Be A Guarantor?

It does kind of go without saying but if the person who wants to guarantee your payments has a poor credit history themselves then they won’t be suitable. This also goes the same for anyone that has previously been bankrupt even if it’s now discharged or settled as unfortunately, lenders will not accept them. Guarantors should have a blemish-free credit reputation or at least of good credit standing to qualify.If the person who wants to guarantee your payments has a poor credit history themselves then they won’t be suitable to be a guarantor.

If they have previously been bankrupt, on an IVA or subject to a CCJ, unfortunately, lenders will not accept them.

Guarantors should have a blemish-free credit reputation or at least of good credit standing to qualify.

If they live abroad or do not have an income in the UK, unfortunately, they are very unlikely to be accepted, and finally, it’s worth noting too that if you or your guarantor do not answer all the questions on your credit application truthfully, then this can really affect your credit-worthiness as it would be deemed an act of fraud.

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The Benefit Of A Guarantor

If you are an inexperienced borrower, or a borrower with bad credit, then you might find it very hard to find a loan or even be approved of the maximum cash outlay that you need. If you do find a loan, it will likely be a ‘bad credit loan’, meaning that the rates will be increased to reflect this. This fixed term loan is designed primarily for people with poor credit ratings and would need a security in the form of a guarantor who could vouch and also be responsible for any repayments in case of default. Both of you are legally bound to the credit agreement which also spreads the risks and also shares the responsibility of repayment. Having a guarantor with good credit score automatically boosts your paying or financial capacity and also expands the lender’s appetite for risk on granting you loan.
If you are an inexperienced borrower, or a borrower with ‘bad’ credit, then you might find it very hard to be approved for the loan you need. If you do find a loan, it will likely be a ‘bad credit loan’, meaning that the rates will be increased to reflect this. This fixed term loan is designed primarily for people with poor credit ratings and would need a security in the form of a guarantor who could vouch and also be responsible for any repayments in case of default. Both of you are legally bound to the credit agreement which also spreads the risks and also shares the responsibility of repayment. Having a guarantor with good credit score automatically boosts your chances of being accepted for credit, whereas normally you would not be successful without a guarantor as security.

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Tell Me More….

This is similar to a secured loan, which is a type of loan that is secured against an asset – such as real estate. If you don’t own a property though, or if you don’t want to risk losing your home; a guarantor loan is a better option. The guarantor will be asked to co-sign with you on the credit agreement and he or she should also agree to cover the payments once the borrower defaults in doing so.
A guarantor will also need to be someone who is at least 18 years old, in receipt of regular income, and some lenders will only accept guarantors who are homeowners, although this is not always the case. If you have been successfully matched to one of Monevo’s panel lenders, before you proceed with your application, please check the lender website FAQ pages or speak to the lender directly.

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Why a guarantor?Can a guarantor be retired?

Borrowers who have not established good credit history yet may have difficulty with other personal loans especially if you don’t have a property that can act as your security. So, people with poor credit rating fix their eyes on a guarantor loan. Asking someone with an impressive credit rating to act as your guarantor, in effect, becomes your security or insurance when wanting to borrow cash. It’s your job then to demonstrate to lenders that you aren’t that much of a risk – and one way to do that is with a guarantor. With a guarantor, the lender now has a guarantee that they will get their repayments – even if they don’t come from you. The guarantor consents or authorizes their accounts to be debited in case of borrower’s non-repayment.
This will again depend on your lender; some may not accept retired individuals to be guarantors. Some lenders will accept a retired guarantor as long as they’re aged 18-75 and haven’t had trouble paying bills in the past.
Although they do not have to be a homeowner, it may increase the possibility of accepting them as a guarantor if they do own their own home.
The guarantor will have to pay the loan back if the borrower doesn’t, so they must be able to afford the monthly payments and still have enough money to live their normal life.

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What’s Needed….

In most cases, having a guarantor with a proven good credit history will give you a better chance of being accepted for the amount you have applied for. While they may not really be in it for the cash outlay, guarantors are wholly responsible for repayments in case of any default on the part of the borrowers. It requires a guarantor with good credit standing or with good equity that can be financially responsible in handling payments should you fail to do so.

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The Perks….

Your guarantor –  This is someone that will guarantee your payments to the company on a monthly basis. They also promise to pay up just in case you run default of payments. You must also understand that the guarantor is not just a mere character reference but someone who would be responsible for repayments in case the borrower doesn’t pay on the agreed due date. By using a guarantor, you’re more likely to be approved, if you have been rejected in the past due to your credit history or lack thereof.

Finding Your GuarantorThe Process Explained

Of course the next challenge is finding someone who is willing to be a guarantor! You can tap easily into your network or connections like family, relatives, friends, or colleagues at work whom you have established both personal and professional connections and solid reputation. They would know first-hand your financial capacity, behavior, and mindset. There shouldn’t be any problem if you have successfully built rapport and trust within your network.

There is a huge risk in agreeing to be a guarantor especially when it involves money. For one, the borrower would be opening up their financial books and credit reputation for lenders to decide on whether to approve or deny borrowers from getting the financing they need. They also run the risk of being chased for repayment just in case the borrower falls behind his or her due date. More so, their credit reputation is in line and could also be in deep sand once the borrower defaults in payment. This is the reason why guarantor loans are also based on trust and reputation because there is great risk when you decide to be involved in agreements as a guarantor. Most guarantors seek legal advice first before they would sign anything to avoid any legal impediments in the future.

But hopefully, if you are taking out a loan, then that means you should be in a position where you know you’ll be able to make all the repayments on time. You might not statistically seem like a good bet on paper but hopefully you will find it a lot easier to convince a parent or a close friend that you are not a risk and that way you can get a loan even when no one else would otherwise give you one.
There are many different types of loan and ways to get them. If you absolutely need the cash, then you will almost always find that there is a way. However, as always, the responsibility lies with you to make sure that you aren’t taking on more than you can afford to repay. And of course this responsibility is even greater when you are involving a third party who is trying to do you a huge favour.
Once you have entered your details on our application form and pressed ‘Apply Now’, you are almost instantly matched to a lender or service provider by Monevo.

If you are successfully matched with a lender, you will be instantly redirected to the lender’s website.

Here you’ll complete the application and await a decision. Your guarantor will also be asked to complete their part of the application.

The exact process may vary depending on the lender you are matched with however; the lender will normally want to speak to the guarantor to confirm their details. The lender may wish to speak to you also to check over and finalise everything.

If you are successful in your application, the loan will normally be paid out within 24 – 48 hours of the application being accepted. Most lenders aim to get the money into the guarantor’s account on the same day as approval.