Guarantor loans are the most appropriate kind of loan for people who do not have collateral and are in a bad credit situation. Many people can avoid bankruptcy by taking out a loan in order to stay afloat financially. Most of the time, people who need loans are the people who do not have enough collateral. That is the reason a guarantors loan might be appealing. On the part of the lender, as long as the borrower is able to pay the monthly repayment, there is a very strong possibility they will grant the loan.
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Guarantors are the critical factor for loans with a guarantor. If they are not available, the loan will not be processed or approved. Guarantors are the people who consent to shoulder the current loan if the actual borrower is not able to pay the monthly repayments. Because they are such a critical factor to the loan being paid out, they must be well qualified to take the loan. They must own their own property, be at least twenty-five years of age and possess a very clean credit record. In regards to the guarantor's income they must be working or be in receipt of a fixed income, such as disability benefits or a pension. Take note that requirements for the guarantor often vary depending on the policy of the lending company.
A borrower only needs a guarantor in order to be approved for guarantor loans. If they does not meet the minimum requirement, the loan application will not be processed until such a time that a qualified guarantor is found to back the borrower. Loan companies can usually hold onto the application until another guarantor is put forward.
Guarantors for these types of loans have a large amount of responsibility. Aside from being the key factor in loan approval, they also take the responsibility to pay for the loan in case of non-payment by the borrower. Initially, guarantors, with their approval, are being checked to validate their eligibility to act as a guarantor. The guarantors' credit rating is not affected by standing as a guarantor. However, if the borrower fails to pay the loan and the guarantor does the same, their credit rating will be greatly affected. Non-payment by the guarantor will sometimes result to disqualification as guarantor within the lending community. When applying for guarantor loans, make sure that the guarantor is able to cover for you in case of any default in loan payment.
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