Market research among lenders in the guarantor loans space has revealed that the demographics of people applying for guarantor loans is very varied
. Employed, self employed or retired. Most people applying are tenants either local authority or private landlord.
The most common reasons stated for applying for a guarantor loan are to clear existing debts (debt consolidation), largely due to multiple payday loans, capital purchases i.e. something like buying a car or using the money as a deposit loan.
Payday loans can quickly mount into a large sum of money once charges have been added and interest has been allowed to accumulate.
Lenders have seen examples of bank statements from clients where a number of payday loans for a few hundred pounds had quickly multiplied with charges and interest.
One worker stated "Payday loans certainly have their place, they can work as a one off for that urgent bill that comes in mid way through the month, but it is when we see customers that pay back the loan from their monthly pay then are short for that month so have to do it again. It is most certainly not a cost effective way to work."
"Others are looking to do home improvements or buy a new car - the normal reasons you would expect to see - whilst others want to pay for a wedding or there was even a christening."
So it may seem that people have little in common but they do. This worker also stated "Most of our customers seek a guarantor loan because they are frustrated. They have been round the houses and have been turned away - either by the traditional banks or even the more specialist lenders. I know it is a clich to say that we are 'throwing them a lifeline' but sometimes it feels like it"
So in summary, whatever your personal circumstances it seems that this new type of loan could prove to be a viable option to your lending requirements.