Opening a loan, no matter the type or amount, can be life altering. The truth is, this decision will affect your life in multiple ways, and perhaps for your entire life if not taken seriously. Whether you need a new car loan, mortgage loan, or perhaps a simple line of credit – it’s essential that you take the time understand what you are about to do.
When it comes to Guarantor Loans, it could not be truer. In this article, we are going to explore guarantor loans and 5 things you must know in the United Kingdom before you apply and sign the dotted line. Keep in mind, as we go through each concept, we do suggest that you contact lenders for specific requirements. Some companies require applicants to honor unique requests. Without further ado, let’s dive right in!
Need Vs. Want
The first thing that anyone in the United Kingdom must consider before opening a guarantor loan is differentiating between the need and want for a guarantor loan. While loans can be incredibly beneficial, many people make the mistake of opening a loan and end up finding themselves in years upon years of debt. The truth is, you should never open a loan because you want to. It’s simply not a financially sound decision. Now, we understand that guarantor loans can help with boosting credit score; however, if the want is stronger than the need, experts highly advise opening a guarantor loan.
Before you can apply for a guarantor loan in the United Kingdom, it’s vital that you know exactly who you are planning on picking to be your guarantor. Picking the right guarantor is just as important as selecting the right lending company. With that being said, it’s important to select an individual that you trust, has a great financial background, and has a great credit score. It’s suggested to find a guarantor prior to selecting your final choice for a lender. Reason being, if the individual you selected for a guarantor is financially savvy, they may be able to help ask questions and find the best company.
Length of Loan
When you are considering opening a guarantor loan in the United Kingdom, it’s important to know precisely how long you need the loan to bee. Are you look at opening a 1 year loan? Better yet, do you need a 5-year guarantor loan? This is pertinent as it will impact not only the payment cost over the years, it may influence the APR %, and so much more. Given the nature of loans and lending in the United Kingdom, it’s absolutely essential to figure all of this information out before applying for a guarantor loan. Always keep in mind, the longer the loan is active, the more interest will generate, and the more money you will pay.
When it comes to your credit score, there are a few different aspects that must be covered, specifically when it comes to guarantor loans in the United Kingdoms. First and foremost, your credit plays a vital role in the entire approval process. The higher your credit score is, the better your ratings, fees, and monthly payments will be. With that being said, for some people, depending on where they are at on the credit scale – it’s advised to avoid applying for a guarantor loan and simply improving their credit score. This way, they may apply without a guarantor. Evidently, this is catered for individuals with slightly higher than average credit scores; however, they may still need a guarantor for a less-risk factor.
In addition to this, it’s important to know that, once you do apply for a guarantor loan, or any line of credit for this matter, your credit score and report will be negatively impacted. Even more so, it’s advised to not apply for multiple guarantor loans or credit cards at the same time as the risk and harm will be even greater.
Specific UK Requirements
The last part that you must know before applying for a guarantor loan in the United Kingdom are specific UK requirements outlined by law. To help catch you up to speed, we are going to list the most important requirements. As always, if you ever have any questions regarding details or more specifics, feel free to contact a local lender for information:
- All borrowers must be at least 18 years old.
- All borrows must reside in the United Kingdom.
- You must be making a minimum of 500 per month.
- Guarantor must be 25 years old.
- Guarantor must have good-to-great credit score ranking.
These are considered the most pertinent requirements; however, there are a few other ones that can help expedite the entire process. For example, when going into to apply for a guarantor loan, it will demonstrate a level of professionalism and responsibility if you prepare all of the documents in advance. Now, please keep in mind, some lenders may have more specific requirements. For example, some lenders will only allow individuals with a homeowner for a guarantor. In light of this, it’s vital that you do proper research and learn exactly what is expected of you.
Guarantor Loans in the United Kingdom
Opening a guarantor loan in the United Kingdom can be an extremely exciting opportunity. However, it’s important that, prior to applying and signing any dotted line, you are fully-prepared, and all of your questions are answered. The reality is, a loan can be risky, and, without proper preparation, you may find yourself in years upon years of debt, high interest rates, and struggling to pay monthly payments.
With that being said, in this article, we have shared five critical aspects that you must take into consideration to make the entire process much simpler and harmonious. By creating a game-plan today, preparing for all that’s to come, and ensuring all of your basics are covered, you will secure the best possible loan for your situation.