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Criteria for choosing the right guarantor

Being a type of an unsecured loan, guarantor loans unlike logbook loans www.justlogbookloan.uk, will not require you to risk your car or house by putting it up as security. While virtually anyone can act as your guarantor, you need to be very critical when settling for one. This is because the guarantor you choose can either increase or destroy your chances of getting the loan. And even though it seems like a simple process, it can be one of the toughest steps when applying for a guarantor loan. You, therefore, need to be very careful when choosing one. Here are some few tips you can use to help you out.

Lean on trust

You really need someone that you can trust, and they also need to trust you right back to risk their financial situation for your sake. This is very important since you might face some hard times in meeting your payments. In this case, your guarantor will be required to cough out the payments. All these are possible outcomes that should be expected and can have dire consequences. You do not want to ruin your family or professional relations. That’s why you need someone who can trust you to keep your deal and you can trust them to be there for you. Ensure, the person you choose is fully aware of the responsibilities involved and that in case you default payments they can help you out without hurting their own finances.

guarantor-loans

Good credit

It is imperative to choose a guarantor with more than good credit scores. Remember, you are using a guarantor because you have a poor credit history and their aim is to help you obtain the finances you are looking for. That’s why the guarantor needs to have a blameless credit history so as to convince the lender they can offer support if needed to. Besides, a guarantor with good credit and stable source of income can be able to pay they loan if need be. Avoid going for a guarantor with debts and CCJs. You’ll get a lesser amount than you may need. Alternatively, if the person you’ve settled does not have a positive credit score, they should be a homeowner.

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Go for a close relative or colleague

Most of us typically feel embarrassed to expose our finances to people we don’t know too well. That is why you need to choose a guarantor who is close to you and with whom you will be comfortable to freely express your financial situation without being worried. You don’t want to find everyone in the office talking about how much debt you’re in the next day you go to work. In order to avoid ugly surprises, your guarantor should also be able to open up about their finances to you before you make up your mind. Sometimes appearances lie and the person you think is financially stable could be in a situation that’s a lot worse than the one you are in. Remember, you basically need someone who is close to you to survive any rocky moments in your relationship.

Look for mutual respect

Ensure you have mutual respect with your guarantor as it is very vital for the survival of your loan partnership. You need to respect your guarantor and keep your end of the bargain to avoid putting their finances under strain. Do not default payments if you had not talked about the likelihood of it with your guarantor. Likewise, the guarantor also needs to respect you and keep the loan agreement to the end. He/she should be solvent to pay your loan in case you cannot go on with the payments.

When handling guarantor relationships you ought to proceed with caution. Ensure you are confident that you can repay the loan without difficulties. Discuss with your guarantor the risks involved and confirm that they are comfortable with the arrangements. After all, you do not want to ruin your professional relations because of missed payments.