25 Feb Guarantor Loan Myths
Even though the idea behind guarantor loans is nothing new, this is the way that loans were traditionally arranged and agreed, it would be fair to say that for many people, guarantor loans represent something new. This means that there is a level of uncertainty surrounding guarantor loans and when there is uncertainty, there is every chance that myths will start to develop around something. It is best to rule out these myths as quickly as possible, because guarantor loans can provide the solution that many people require.
It is good that people are wary about finances and that that they look to find out as much information as possible about loans and financial support. Far too many people rushed into taking a payday loan without finding out enough about them, and this has led to problems. Payday loans should be avoided at all costs but sadly, not enough people are aware of why this is the case. Also, too many people are unable to differentiate between payday loans and guarantor loans. While both of these loan options cater to people who have bad credit, they are very different things. You should be looking to avoid payday loans but you’ll find that a guarantor loan could be exactly what you are looking for.
This is why it is good to examine some of the myths that surround guarantor loans.
A Guarantor must provide their bank details to the lending company
This is something that many people believe to be true in every case but it should be noted that only some guarantor loan companies ask for banking details from the guarantor. If the guarantor is uncomfortable with providing their information, there will be guarantor loan companies that don’t request this information and these are the loan firms that should be turned to.
The rate of interest is extremely High
One of the things about offering loans and credit to people with bad credit ratings is that they represent a risk. Quite often the lending company will decide that the applicant is not suitable to receive a loan but there are also plenty of times where a loan company will approve a loan but with an extremely high rate of interest.
Payday loans operate in this manner and the level of interest that they charge can be very high, which should be of great concern to anyone looking for a loan. It is true to say that the APR associated with guarantor loans is higher than the rate of APR that people with good credit would receive, but the rate of interest on offer from guarantor loan companies should be attractive enough.
There is also the fact that there are plenty of guarantor loan companies to choose from, and this means that people have a choice when it comes to obtaining a guarantor loan.
A guarantor loan is secured against the property of the guarantor
While there is often a requirement for the guarantor to be a homeowner, there is absolutely nothing to suggest that the guarantor’s home will be used as security against the loan. The need for the guarantor to be a home owner is more to do with the fact that they understand the importance of paying back loans on time because a failure to do so could impact on their mortgage payments and levels. The use of the guarantor in this instance is used to provide additional insurance for the lending company.
Guarantor loans are only for small amounts
Again, this may be an issue that arises when people confuse guarantor loans with payday loans. The nature of payday loans means that they are far more suited to smaller financial amounts, but this isn’t the case when it comes to guarantor loans. Guarantor loans can be paid back over a longer period of time, and this means that guarantor loans are often provided for larger sums of money, including up to £10,000 or £12,000.
Guarantor loans are listed on the guarantors credit file
This is definitely not the case. A guarantor loan is listed on the file of the borrower and the only way that any reference will appear on the guarantors credit file will be if the loan defaults and both the applicant and guarantor refuse to pay the loan. If this isn’t the case, the guarantor doesn’t have to worry about the loan appearing on their file.
The vast majority of myths about guarantor loans are not true, and they should be ignored or overlooked to ensure that you receive the best financial assistance for your needs.
Andrew Reilly is a freelance writer with a focus on news stories and consumer interest articles. He has been writing professionally for 9 years but has been writing for as long as he can care to remember. When Andrew isn’t sat behind a laptop or researching a story, he will be found watching a gig or a game of football.