Guarantor loans: Your financial safety net

Guarantor loans Your financial safety net
Guarantor loans: Your financial safety net

Sometimes savings for that long-overdue vacation, a spunky new car or home renovations are just not piling up fast enough.

Or, perhaps, financial complications such as unexpected expenses keep rolling up on your doorstep, further hindering your savings.

Whatever the case might be, saving money can be a schlep, which is why many Aussies are opting for credit as a way to fund their needs and wants. Life has many unexpected hurdles which are often the cause for a loan in the first place. And, sometimes, these hurdles can leave a mark on your financial record.

Or, maybe, you are just starting out and have not yet had the opportunity to build a credit record for yourself. This does not mean it’s the end of the line; there is another option: guarantor loans.

Guarantor loans for guaranteed cash

When applying for a loan the lender will always consider your credit score when assessing your application. While some lenders place less priority on credit scores than others, this does not change the fact that they will still look at your financial past to assess your future financial feasibility.

This means that if you have run into some financial trouble in the past, a lender might be less inclined to accept your application. Or, perhaps, you have no credit past for the lender to assess. In either case, you are fairly limited to the loan options that you can explore but with the assistance of a guarantor, you can gain access to a much broader variety of financial options.

What exactly does a guarantor do?

Guarantors act as a form of human security. While secured loans require an asset such as property or a vehicle, some loans require guarantors and these loans are referred to as guarantor loans.

Who can act as a guarantor on a loan?

A guarantor can be a family member, friend or trusted colleague. So long as they meet the guarantor criteria, the lender will consider them. The guarantor will need to have a good credit score and, sometimes, an asset to offer as collateral before the lender will consider allowing them to sign as a guarantor on the loan.

If the borrower’s credit history is either poor or non-existent, a guarantor can vouch for the credibility of the borrower. The guarantor then co-signs the loan and agrees to accept responsibility for loan repayment should the borrower find themselves in the position that they are unable to repay the loan.

If you have been denied credit from other lenders in the past, then a guarantor loan is the next logical step for you to take.

Taking a step in the right direction

Being unable to get the finance that you need can be frustrating, especially if it’s as a result of past financial problems. A guarantor loan can help you to bury the financial problems once and for all and start over fresh.

Not only do guarantor loans increase your probability of being accepted for the loan you need, but they also give you access to larger borrowing amounts at better interest rates and longer repayment terms. This gives you, as the borrower, more freedom to arrange your loan the way that you and your budget prefer.

Settling your guarantor loan early

Many lenders also allow the borrower to make additional repayments or early settlements of the loan at no additional cost. In this way, you will be able to repay the loan faster and save on money and stress. A few bumps and scratches from the past should not dictate your financial future and guarantor loans can help you to regain your financial freedom.

If you can meet all necessary repayments without issue, your credit score can improve giving you access to better personal loans in the future without having to rely on a guarantor again. Since the guarantor acts as a form of security, the borrower will also not have to secure the loan with an asset.

This will keep your property and vehicles safe should matters go askew. No matter the type of credit situation you find yourself in, a guarantor loan can provide you with the solution you have been looking for.

Where to get a guarantor loan

The first step is to find a lender who supports guarantor loans. This can be done by exploring loans on loan comparison sites or even consulting with a loan broker – the broker will be able to find the best lender for your financial situation.

After you’ve decided on your preferred lender, your chosen guarantor will need to complete an application to determine if they meet the specific guarantor criteria set by the lender.

If the application is successful, then the lender will consult with both the borrower and guarantor to finalise the loan documents and the money can be transferred to the borrower.

Alternative options to guarantor loans

If a guarantor loan is out of reach and you do not have the credit to qualify for a personal loan on your own, there are other options. These options include taking out a bad credit loan or taking out a secured loan.

In the case of a bad credit loan there are only a handful of credit providers who will be willing to assist you. In exchange for the high level of risk that these lenders take on, you will pay a higher interest rate than someone with good credit.

In the case of secured loans, you can use the equity in your home to take out a loan. Vehicle loans are always secured on the vehicle being purchased and some lenders will help you with a car loan, provided that you meet some of the bad credit requirements and requests.

While finance can be a tricky business, there are ways to steer the wheel the way you need it to go. Apply for a guarantor loan today; your bright financial future awaits!

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