When it comes to small repair jobs and essential home improvement purchases, guarantor loans can be an easy way of putting funds together in a short space of time—but what are their pros and cons?
Guarantor loans, a type of lending scheme that requires a guarantor to co-sign the credit agreement, are becoming increasingly popular among individuals who have less-than-ideal credit ratings. Guarantors will pay for someone else’s debt in the event of a missed payment or default of a loan obligation. As with all financial agreements, they have upsides and downsides—read on for their pros and cons.
-Guarantor loans might enable you to get a loan when all other borrowing options are unavailable and unachievable.
-These types of loans are fast—most providers will allow you to access the money on average 24 or 48 hours after your application is made depending on how it is submitted. This means that in the case of an emergency—like a broken down car—you won’t have to turn to lenders with higher interest rates.
-If you have bad credit car finance, opting to take out a guarantor loan will allow you to get the best possible deal on a new car, save money and avoid choosing a vehicle from a specific dealership just because it offers bad credit car finance options.
See also: Affordable Housing
-Perhaps the biggest con of a guarantor loan is that you will need to ask for someone’s help in order to secure one. This person will become liable to make payments in the event of breach of agreement—it is a big commitment and one that should not be taken lightly on either side.
-Some interest rates on offer may be higher than expected. Even though these rates tend to be lower than the ones tied to a payday loan, they are still considerably higher than ones offered on a personal loan from a mainstream bank or building society.
-If you have enjoyed reading this article on guarantor loans, click here to read more on Celebrity Angels about choosing a mortgage.