Low APR Guarantor Loans
Borrowers with bad credit scores may find it more challenging to find it more difficult to secure traditional personal loans; some borrowers may consider opting for a guarantor loan therefore instead. Guarantor loans are a type of loan designed for borrowers with poor credit scores, they work by a third party, normally a friend or family member of the borrower accepting responsibility to repay the debt if the borrower fails to make their repayments.
About Guarantor loans
If looking for low APRA guarantor loans a borrower will find that APR offered can between lenders as well as by period and loan amount and other factors, despite the added level of protection offered to a lender by the guarantor on the loan, it is very likely that a guarantor loan will have higher interest rates than you would find on a good credit personal loan of the same size. However lenders may be willing to offer larger loan amounts than they would with other types of bad credit product.
Although specific requirements can vary by lender, guarantors are usually required to:
- Be aged 21 years old or over
- Have a permanent UK address
- Some lenders may require them to be a UK homeowner
Agreeing to be an guarantor is not something to be considered lightly and it is important that the guarantor completely understands the implications before they sign to agree to be guarantor; if the borrower misses a repayment on their loan it will become the guarantor’s responsibility to repay to the lender, if the loan is secured against the guarantor’s home then they risk it being repossessed if they cannot repay the loan.
Before taking out a guarantor loan
Although there are a more limited selection of guarantor loan lenders compared to regular personal loan lenders, it may still be wise to shop around different providers to try and find the best deal available.
Borrowers may also want to consider other options. If the borrower already has the required funds in their savings it may be better to use these than seek finance. This is because the interest rates earned upon a sum may be considerably less than a borrower would be charged on a guarantor loan of the same size.
Borrowers may also want to consider other types of finance and consider checking their credit score to see if they can find out which products may be available to them.