Have you ever been stuck with a bad credit score? If your answer is yes, you don’t have to worry because you are not alone. Along with bad financial conditions in the UK, most customers have low credit scores and are worried about their chances of getting more loans. Although it is a simple truth that lenders do not lend to people with low credit scores or even with no guarantor finance, some loans specifically cater to the needs of borrowers with bad financial conditions and poor credit scores. Guarantor loans are one such option that can financially help someone with a bad credit score.
Basic Knowledge of a Guarantor Loan
When it comes to a guarantor loan, it means that the guarantor does not have to provide any collateral to make this loan, so they are unsecured loans. In this case, a lender can give up to 5,000 pound sterling for a customer that meets their financial obligation. The most crucial difference to note if compared with conventional and business loans lies in its backing up. When applying for this loan, a guarantor will secure the loan and is more responsible in dealing with your financing. In this case, the guarantor should be a UK citizen with a good credit score to qualify as one.
The Eligibility Criteria of a Guarantor
People who are eligible to be a guarantor can be everyone. It can be your parents, siblings, or friends as long as they do not share the same credit from any bank account, credit card, or mortgage. The person must be working with an excellent organization, must not have declared bankruptcy, and must not have any court cases. In conclusion, your guarantor must have a good payment history and a great credit score. It can allow them to act as a guarantor for another person who has fallen behind on an online expense.
The Task of a Guarantor
The task of a guarantor may be negligible during the entire process. However, there is a time when they have to sign a document declaring that they are the guarantor to a person who takes a loan. From time to time, loan companies usually ask the guarantor to provide their bank statements as part of the formal documentation.
The Time to Access the Cash
Once the loan companies receive all the documentation, your funds are likely to be processed and arrive in your bank account within seven business opportunities. It is the most significant benefit of executing a collateral loan, especially when you can get quick and easy access to money. The lenders of this loan will assess your financial situation and documents before repaying you the loan.
Pre-Payment Fee on Guarantor Loans
For most lenders, the question is whether you can repay the loan early without having to pay a pre-payment penalty. However, the fact is that there is no repayment fee associated with these loans. Instead, the faster you repay, the more you can save on the interest accrued. Therefore, with the introduction of UK guarantor loans, you need to worry about taking additional credit lines with a bad credit score.