Tenant Guarantor Loans
Tenant guarantor loans are a sub-type of guarantor loan that do not require the guarantor to be a UK homeowner.
About guarantor loans
If an individual opts for a guarantor loan, despite the fact they are less commonly offered by providers than other types of finance such as good credit personal loans, it is still wise to shop around different products to try and find the best deal available.
The Annual Percentage Rate (APR) offered on guarantor loans can vary by provider, other factors that might influence how much APR is charged can include the size of the loan and the repayment term. Although a guarantor loan may allow a borrower to borrow a larger sum than other types of bad credit loan, the APR offered by these products do still tend to be higher than you would expect to pay on a good credit finance product of the same size.
Guarantor loans are a type of finance intended for people who either lack a credit score or have a bad credit score who would find it challenging to secure a standard loan product. They rely on an individual, who is normally a friend of family member of the borrower, with a good credit history agreeing to be the guarantor on the loan for the borrower. This means that the will be required to repay the debt owed to the lender if the borrower fails to make their monthly loan repayment.
Agreeing to act as guarantor is not a decision that should be taken lightly, and it is vital that the guarantor fully understands the risks involved beforehand.
Specific requirements for who can be a guarantor may vary by provider but generally include:
- They must be at least 21 years old
- Have a permanent UK address
Before taking out a guarantor loan
In addition to shopping around providers, a borrower may want to consider alternatives to a guarantor loan, they may wish to find out exactly what their credit score is which might give them idea if any other products are available to them. If the borrower has the requisite funds in their savings they may wish to use those instead, as the interest rare they would earn on their savings is likely to be significantly less than the interest rates they would be required to pay on a guarantor loan of the same size.