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What you need to know about guarantor loans

To some people, getting a loan can prove to be an uphill task, especially if their credit history is not pleasant. There’s an estimated 7 million citizens in the UK who cannot be loaned by a bank because of their credit history. That’s why a guarantor loan is specifically designed to offer a solution to such people. However, even though most common users of guarantor loans are people who have been turned down by mainstream lenders due to their not so pleasant credit record, people with good credit can still access them. Here is an easy to understand overview that will tell you all you need to know about guarantor loans.

What they are

Being a type of an unsecured loan, guarantor loans, unlike logbook loans, will not require you to risk your car or house by putting it up as security. All you will need is a co-signer; someone who vouches for you. This means that your co-signer offers to repay your loan should you default on the agreed payments.

How they work

Guarantor loan lenders operate on a very simple principle behind them; if the guarantor trusts you, so would the lenders. This is because by having a second person as a guarantor, you are showing that you can be trusted despite having a poor credit history. After all, having an imperfect credit history doesn’t mean that you shouldn’t get any loans; you still deserve a chance to make investments. Therefore, for whatever reason you may need the money for, whether it is to get a new car or boost your business, you are assured of acquiring money from a guarantor loan lender.


A guarantor loan is no different from a borrower asking for money from a lender. The only thing that stands out here is that there’s a third party involved. Once you make an application, fill in all the paperwork and meet the requirements, your co-signer will receive an email that will link him or her to your account. They would then fill in their own details and sign a document that binds them to the contract.

It is important to note that if you default the agreed payments, your guarantor will be legally responsible for it. They will have to repay the loan on your behalf. Therefore, ensure you can afford the loan before signing your guarantor.