Defined in the dictionary as “A person, organization, or thing that guarantees something”, a guarantor is usually an individual willing to back up another person’s commitment. In the case of loans with guarantors the guarantor is assuring (pr guaranteeing) the repayment of a loan; if the borrower is unable to meet their original obligation with a lender then the guarantor is obliged to step in and make the payment on their behalf.

It is very important for there to be a clear understanding between the borrower and the guarantor; both parties must know exactly what their commitments are to avoid problems. It is the responsibility of both borrower and guarantor to ensure they are fully educated in how the loan works and what they have signed up for.

There are many different reasons a lender will ask for a guarantor, it is usually in a situation where a mainstream lender; such as the borrower’s bank or building society, is unable to help. It is not common for a mainstream lender to accept guarantors which is why specialist guarantor lenders have been growing in number over recent years.

Common Reasons for Needing a Guarantor

1. Bad or poor credit history
2. A lack of past credit leading to a lack of credit history
3. Recently moved to the UK
4. No job history

There are lots of different criteria for guarantors throughout the loan market, here at guarantor loans online we strive to be more flexible with guarantors though we still have set criteria for what we look for in a guarantor.

An Example Of Guarantor Criteria

1. The guarantor must be no older than 75 at the end of the loan term.
2. The guarantor must have a reasonable credit history.
3. They must be receiving a fixed income, working is ideal but other circumstances can be taken into account.
4. They must be a homeowner.
5. The guarantor can not be financially linked to the borrower. For example; a partner living with the borrower would not be suitable as a guarantor.

Being a guarantor can be a great way to help out a friend in need. There must be a good level of trust involved so it is often a good idea for the borrower and guarantor to sit down and discuss income and expenditure to ensure it is affordable. Also consideration should be given to a situation where the guarantor has to step in temporarily or permanently.

Alex Clarke invites you to find out more about guarantor loans and the expanding loan market. Alternatively you can apply for a guarantor loan up to £5000 at directly at guarantorloansonline.co.uk or contact a loan adviser on 0800 032 1414.

Guarantor Loans Online are a no fee lender and guarantor loan specialist. They offer fast online applications, low Rates and loans up to £5,000.

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