Money Talk: What Makes a Good Guarantor?

Money Talk: What Makes a Good Guarantor?

When the time comes for you to need a loan, there are several different things that you need to think about. You will need to think about whether or not you can afford the repayment terms and you will also need to think about whether or not your own financial situation is going to stand in your way as well. If you have a bad financial history then there is a high chance that you will need a guarantor in order to secure your loan.

What Your Guarantor Needs to Have

When choosing your guarantor, you have to make sure that their history and even their current circumstances are taken into account. A lender will want a guarantor to be a homeowner and it is more than possible that an age restriction will be put into place as well. They may also be investigated to see how much debt they have. If you suggest someone who has a bad history or if they have any financial penalties then this will set off an alarm bell to the lender and they may reject your application.

Friends or Family

A lot of guarantors are actually friends and family. You may feel easier asking someone who is close to you to be your guarantor. You do have to consider the situation carefully though, because if you don’t make the payments then this can put an insane amount of stress on your family and friends. If you don’t feel comfortable asking a family member or even a friend to be your guarantor for you then you may want to opt for someone who you have a close and personal relationship with. Your employer or even your business partner may be a good option here but you will want to proceed with caution because you don’t want this to affect your professional relationship either. Sites such as guarantor.loan are great for helping you to find the right guarantor.

Making the Decision

The decision to find a guarantor will be down to you. Lenders are always weighing up the risk involved with giving people a loan and guarantors are always viewed as being upstanding members of the community. It does help to discuss the decision with the guarantor first because you have to make sure that they are comfortable with the repayment schedule should something happen. You also have to make sure that you are comfortable with it as well, because if you are not then this will cause you real issues at a later date.

Of course, even if you do manage to find someone, you do still run the risk of them being rejected for no reason at all. Sometimes lenders just get a bad feeling and they base their decision on the full picture and for this reason you have to do everything you can to meet the criteria that they have if you want to ensure the best result at all times. If you have any questions then most loan providers would be more than happy to answer them for you, you just have to make sure that you do this ahead of the process so you don’t waste any time.

What do you think about guarantors?

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