A lot of the personal loans or short term loans available for people with a bad credit rating tend to have high interest rates (APR).
Fortunately, the likes of guarantor loans have interest rates that are around the same as standard high-street bank loans. However, guarantor loans are for people with poor credit scores, unlike a standard unsecured loan from a bank.
Guarantor loans are growing in popularity, especially since they can offer larger loans over a longer period than standard short-term or payday loans. They’re especially good for young adults who want to take out a loan but don’t have the hottest credit rating. Essentially a parent or guardian can act as a “guarantor” for them so that, if they’re unable to repay the loan, the parent or guardian takes on the debt and repays it on their behalf.
This is probably the only significant downfall of a guarantor loan – you have to rely on the fact that your parent, guardian or friend will repay the loan if you can’t. You should only really consider this type of debt if you’re reasonably confident that you will be able to repay it or that your loan guarantor will be able to repay it if you’re unable to.
Its worth remembering that, unlike a payday loan, a guarantor loan can pay anything up to around £10,000 or more in some instances. It’s merely reliant on the good-word, financial status and credit history of your guarantor…
It probably sounds like quite a lot of hard-work – and it is, it’s no online payday loan application that’s for sure! But, if you need to improve your credit score and you need a large sum to buy a car, start a business or simply need to get yourself out of a rut then it might be worth considering.