subject: Being A Guarantor On Guarantor Loans [print this page] In the current economic climate many people have found that their credit rating is not quite what it used to be. This is not always down to the individual being careless with their finances, in fact it could be through no fault of the person at all.
When this situation occurs, it can be a real struggle to obtain the finance that is often needed to maintain a normal lifestyle.
One option that is available to those in this situation is a guarantor loan. These work on the basis that the applicant adds a homeowner onto their application to effectively guarantee the repayment on the loan.
So, what happens when you agree to be a guarantor? The honest answer is not a lot, in fact, after the initial application process, the guarantor should have little or no involvement in the loan whatsoever, providing the debtor keeps up with their repayments.
During the initial application process, the guarantor would normally be required to provide the loan provider with copies of their bank statements, as well as a proof of identification. They may also have a credit search carried out against their name, and could also be asked to prove that they are in fact a homeowner.
Becoming a guarantor is of course a big undertaking for the person concerned, so it is important to understand exactly what you are letting yourself in for and you understand your responsibilities when agreeing to it. For this reason it is normal for the loan company to speak to the guarantor directly, to discuss exactly what would happen should the debtor fail to make the repayments.
Guarantor Loanproducts are continuing to grow in popularity. A lot of people are obtaining the finance they need, when they thought it may not be possible, thanks, of course, to the guarantor.
In summary, being a guarantor for a loan comes with an amount of responsibility. Never sign as a guarantor unless you a comfortable with what you are doing and even what company you are dealing with.
by: Jon Miller
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