Saving up for a big purchase can be a difficult thing to do especially if you do not have a large income. Therefore, you have to find other ways to get the money and getting a loan has become a popular way of receiving the necessary funds.
However, even receiving a loan can be a hard task. Banks do not grant loans to anyone and your credit score needs to be quite high. Luckily for you, if you do not meet these requirements, there is also another way of securing a loan if you cannot do it on your own.
A guarantor loan is a loan where someone else guarantees for your and co-signs the loan. If anything happens and you are not able to pay back the money, the guarantor is the one that will liable for the payments. Acting as a guarantor is a big risk and that is why it can be hard to convince a person to do that. In most cases, friends or family members are more likely to accept this.
This kind of loan is usually the only option for many young people that do not have a credit rating yet and need extra security from a guarantor.
Should I get a guarantor loan?
Guarantor loans are usually a choice for people who are not eligible to borrow money. This happens because the lender does not consider them able to repay the money and that’s usually because the persons who want to be borrowers do not have a credit rating or have a poor one. It can also happen if they had problems with previous loans or if the loan is too big.
If you do have these problems, guarantor loans direct lender might be the only solution for you. However, you should be careful. If you still have income problems, you probably should not get a loan that you cannot pay back.
Even if you do find a guarantor, you will have to know that the lender will check other things as well. For example, your income will be assessed. It must be big enough to meet the repayments. Therefore, before you apply for a loan you have to make sure that you have a stable job with a good income.
If you cannot find a guarantor or you simply believe that this kind of loan is not what you want, you can always try other alternatives. A good one would be trying to improve your credit rating. While it is quite difficult to accomplish this, it is not impossible.
One way to do it could be by analyzing your credit report. There can always be errors or outdated information that will help you improve your credit rating. You can also try getting small short-term loans. These get approved easily and paying them back will demonstrate that you are able to respect the loan requirements and your credit score will automatically be improved.