Guarantor Loan Scams And How To Avoid Them
You may have heard the phrase guarantor loan bandied about on the net quite a bit, so what exactly is a guaranteed loan, where can you obtain one and how do they work?
Well firstly, it is worth pointing out that a loan, any type of loan, is nearly always subject to a caveat or disclaimer that says a loan can only be guaranteed if certain conditions are met. There is a good reason why this is so because in the case of an unsecured loan, lenders are in a far weaker position than the borrower when it comes to rights about paying the loan back.
To qualify for this loan, you just need to find someone who can support your application that has a decent credit history, owns their home (outright or mortgaged) and is 21 or over. This will allow us to process your application as a supported or endorsed application and this means that it will be a lot easier for us to find you a loan.
Guarantor loans allow someone who is likely to be refused for a traditional loan, an opportunity to borrow up to 5000, as long as they have someone else who can vouch for their application. This person will be guaranteeing that the loan will be repaid whatever the circumstances, so even if a borrower cannot repay the loan or will not repay the loan, then the guarantor will step in and ensure that the loan is repaid in full.
However, please be aware that some loan firms are purporting to offer guarantor loans to borrowers but amazingly (and we still cant get our heads around this one) they insist that the borrower must also have a decent credit history, in addition to the guarantor. Now forgive us if we have got the wrong end of the stick but isnt that the reason for a guarantor loan? If a borrower had a decent credit history then they wouldnt need a guarantor loan as they could walk into any high street branch and get approved for a loan in no time. Very odd indeed.
A guarantor loan is an unsecured loan which means that a lender is effectively lending someone the cash without having any security against that loan. That means that the borrower does not have a house to put up against the loan. Why should this matter you may ask yourself? Well, it means that if the borrower of an unsecured loan is unable to pay the loan back (or doesnt want to repay the loan) then the lender is going to find it very difficult to get this money back from the borrower. Yes, they could take them to court and apply a county court judgement against the borrower but it still does not mean that the lender will get repaid.