If you don’t have good credit rating, or if you don’t have credit rating at all, then getting a loan may be difficult task for you. You will have to struggle to get a loan in the first place, or you will be obligated to take payday loan which will result you paying high interest rates and you could end up in a real financial catastrophe. Not long ago new type of loan has shown up on the market, a guarantor loan. This type of loan provides you to take a loan and a second person will guarantee for the money you took.
What is a guarantor loan?
This is an unsecured loan that requires a second person to guarantee for the money that first person took. It can be taken on one and up to five years and the amount that can be borrowed is between 1,000 and 7,500 dollars. This is a perfect solution for those people who have bad credit history, or for those who wouldn’t be able to obtain a loan on the other way.
This loan is different than payday loan, the interests are much lower and you don’t have any additional fee and charges.
How can you decide if this loan is good for you?
Simple, if you have bad credit history, or you have been rejected by other lenders company, then guarantor loan is the right solution for you.
Here you will have possibility to borrow bigger amount of the money, then, for example, with payday loans, which use all possible resources to target people with bad credit history. With this type of loan, you will be able to refresh your credit history, by making payments on time and proving them you are responsible borrower.
In order to apply for this loan, you will have to be over 18 years old and to have a checking account. You will need to prove you have the means to repay the loan and that you are capable to repay it within arranged time.
Considering guarantor, anyone can be that, considering he or she is not financially linked to you. A guarantor can be family member, neighbor or coworker. In order to your guarantor be accepted, it has to be over 21 years old, with good credit rating and has to be home owner.
Regarding interest rates, they are going to be higher than they would be, if you had good credit history. This, of course, depends on the company, but the usual APR is around 50%. This may seem little too high, but it does represent a risk that lender took and borrowed you the loan. The incredible fact is that this is one of the lowest APRs available for people with bad credit rating. But if you repay your loan within arranged time, it will give you a chance to improve your credit rating.
There are two important factors that should be taken into consideration when you choose guarantor loan: interest rates and additional hidden fees.