Why guarantor loans are the ideal option for bad credit borrowers
Guarantor loans are really no different non-guarantor personal loans. While they are easy to get, and you could get the money within 24 hours, you do pay for the convenience with ultra-high interest rates that are charged by the day.
The only difference between a guarantor loan and a non-guarantor loan is this: The former is much easier to get approved as most lenders believe that if someone other than the borrower is willing to sign their name to a loan, it means that the lender truly has the capacity to pay and is decent enough to repay whatever loans they have.
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The Ideal Candidate For This Type of Loan
This type of loan is really for people who have such a low credit score they would have difficulty getting a loan from the normally easy-to-get cash lenders. If you are one of these people on the lower end of the low credit score scale, you should know that there are many lenders out there that offer guarantor-based loans. The only question is: Do you have a guarantor? If you have friends and family as most people do, then you have a pool of potential guarantors. But please take note, even if they are close to you, it does not mean you can get away with non-repayment of loans.
Remember that if someone co-signs a loan, it means that non-repayment by you will reflect on their credit score, and it could affect their finances and strain your relationship. That said, be very careful when applying for this type of loan because it's not just your credit score that's at stake here.
Some Loans Can Be Very Expensive
As we said before, guarantor loans are just about as expensive as non-guarantor personal loans. How expensive, you might ask. We looked at a finance broker website and we found that the average APR among lenders is 842% for small amounts of up to 750 British pounds, and 44.9% for loans from 500 to 12,000 sterling pounds. The difference in the interest rates can be attributed to the repayment terms.
Lower loan amounts usually mean shorter repayment periods, typically two weeks to a month. Loans involving large amounts typically have repayment periods of six months to one year. Whatever you do, you should make sure to compare the terms and the interest rates of at least three different lenders before completing a loan application process. Take note of the fees aside from the interest rates.
Payday loans are commonly the most expensive type of loans on the market. Find out more by clicking on the following link - https://www.citizensadvice.org.uk/debt-and-money/borrowing-money/types-of-borrowing/loans/payday-loans/payday-loans/