Given that a guarantor loans is a very important financial matter, it is crucial that people give it serious consideration before committing to this style of loan. For many people, this style of loan is naturally the most attractive loan option they can choose from, but even with that in mind, people shouldn’t rush into obtaining a loan of this nature. There is a need to consider the pros and cons of guarantor loans.
Pros of guarantor loans
As you’d expect, there are many positive reasons why someone should apply for a guarantor loan. In the current economic climate, guarantor loans are growing in popularity and there are many people looking for more information or guidance when it comes to these loans.
For the borrower
The borrower should see many reasons why they should obtain a guarantor loan.
It may be the only access a person has to a loan
If you have a poor credit score, your chances of obtaining a loan will be limited. Many people find that they have no option apart from payday loans, but these should be avoided at all times. This is where the presence of a guarantor, who will have a much more attractive credit score, can make all the difference in obtaining a loan.
You can obtain a better rate of APR
If someone is in a position to obtain a loan, but not a very attractive one with respect to the APR, they may decide against obtaining a guarantor loan. You need to be sure that you can afford to pay off the loan before you take it out and if the APR is too high, many people will find themselves priced out of the loan market.
This is why obtaining a guarantor loan, with the lender focusing on the guarantors credit score, makes perfect sense.
The loan is easy to apply for
A very good reason to opt for a guarantor loan comes with the fact that this style of loan can be applied for in a quick and easy manner. As the vast majority of guarantor loan providers can be found online, the application process usually involves a quick form. Compare this to the process of obtaining a loan from a traditional lender and you’ll find that a guarantor loan is one of the easiest loans you can apply for.
The loan can be accessed in a short period of time
Another very good reason to apply for a guarantor loan comes with the fact that if accepted, you will receive the money in a short period of time. Most online lenders will provide you with funds in 24 hours of the loan being accepted and an increasing number of lenders will provide the funds on the same day.
Anyone looking for money at short notice should find that a guarantor loan is the ideal option for their needs.
For the guarantor
There is also a strong benefit for the guarantor when weighing up whether a guarantor loan is the most suitable option.
It provides a chance to help out a friend
There is also an obvious benefit to the guarantor. If you know that your friend is in financial trouble, acting as a guarantor is a great way to help them out. This is the sort of legal solution that many friends will be more than happy to undertake to ensure that their friends receive the financial support they need.
Of course, it would be wrong to assume that there were only positive factors to consider with guarantor loans, there are also negative aspects.
There are some negative aspects of guarantor loans that you need to consider.
The associated rate of APR with the loan may still be unappealing
Even though a guarantor loan is available with an attractive rate of APR compared to most loans for people with bad credit, it can still be expensive. It is essential that borrowers work out what they can afford to pay when it comes to a loan.
It can place a great strain on a personal relationship
There is a need to take the importance of a guarantor loan seriously. A guarantor loan can place a great strain on a personal relationship, and the two parties involved with the loan need to be confident that their relationship can withstand the impact of the loan.
There is a need to share personal financial details with someone else
Another reason that some people are wary of guarantor loans comes down to the need to share personal information with people you know. If you are not comfortable with this situation, you shouldn’t consider a guarantor loan.
Knowing the pros and cons of a guarantor loan will provide you with the chance to find the option that is best for your needs.
Andrew Reilly is a freelance writer with a focus on news stories and consumer interest articles. He has been writing professionally for 9 years but has been writing for as long as he can care to remember. When Andrew isn’t sat behind a laptop or researching a story, he will be found watching a gig or a game of football.
December 10, 2016