The importance of loan guarantors

Improving your chances of contracting a new loan may very well depend on managing to have a loan guarantor

13:38 28 October 2013

Loan guarantors allow bad credit history customers to take new loans

For many people across the UK, getting a new loan is a difficult thing. This happens especially if you have a bad credit history or if your income is much lower than what you would like to borrow. In these particular cases, you may get much more flexibility by having a loan guarantor who would co-sign your loan. This will reduce the risks that banks are taking when granting you loans, as the guarantor's credit and credit history will be taken into account too.

Anybody can be your loan guarantor

Any person can become a loan guarantor, but you may want to choose a reliable person with a good financial situation, if possible, as this will ease the lending process. Your loan guarantor can be a distant acquaintance, your best friend or even somebody who lives with you at home. The banks only care that they co-sign the loan and thus guarantee that you will be able to repay it in time.

Finding the right loan guarantors

Finding a loan guarantor is not as easy as it may seem though, as they would have to take on the risk of having to step up and help you repay your debts if need be. On the other hand, loan guarantors allow you to borrow a lot more than you would be able to otherwise, so you need to explain to them exactly what their role is in this whole business. Your loan guarantor should be the closest thing you could get to a business partner, so it's vital that you choose a trustworthy person to play this role. Co-workers and other good friends are welcomed.