This Is Why You Wouldn't Be Pleased with a Guarantor Loan
Harry August 19, 2022

Loans are great!

They help you get money. They help you in saving money.

And then they can make you confused with a guarantor.

Not offending both the guarantor and the no guarantor loans, we can say that every loan has a set of rules.

However, some loans might impose rules that can be a little stressful for you. 

Yes, we are thinking of guarantor loans and it is right to state that it is a fantastic option for borrowing. But again, there might be regulations to a guarantor loan that you might not like.

In order to know what a guarantor loan or a no guarantor loan is, we need to look at the guarantor first. 

A clear conception of the guarantor will lead us to understand the nature of a guarantor loan (and with that a few things about the no guarantor loan as well). 

And that will help us be aligned with the topic of this article.

Why A Guarantor Loan Is Not the Thing, You'll Choose

If there is no guarantee on benefits loan for bad credit close at hand, then you can say there is no such need for choosing a guarantor loan.

But we are going to waste words if we are not serious about knowing who a guarantor is.

So, here it is:

According to lending practices, a guarantor is a person who secures the loan by complying with the regulation that he or she will pay the loan terms following the correct procedures only if the borrower fails to repay the money in time or in sufficient amounts. A guarantor can also be an institution or an organisation. When a guarantor is connected to you in a loan, direct lenders will verify your guarantor's documentation (such as income statement and credit report).

So, a loan with a guarantor would require getting one. 

However, a loan with no guarantors is a deal between you and the lender.

How does a guarantor loan become less appealing then than a no guarantor loan?

Time to find out!

  • You May Not Always Get a Guarantor 
  • Your Credit Score Gets Affected 
  • Can You Rely on Your Guarantor?
  • Not all Guarantor Loans Come with Low-Interest Rates 
  • A Bonus Point to Conclude 

Well, we should now learn more about these points.

You May Not Always Get a Guarantor 

It is highly possible that a borrower did enough research and finally settled to get a guarantor loan.

It is a good decision, after all. 

Many choose their family members as guarantors. Others prefer making their friends or spouses their guarantors. 

Some also make their employer a guarantor for a loan of this kind. 

But the problem is that your guarantor may undergo financial trouble when you want that guarantor's assistance. You can get rejected, which makes you search for another guarantor and, in this process, you lose time. 

A no-guarantor loan saves you from this issue. 

Your Credit Score Gets Affected 

When a guarantor is involved, it is natural for you to stay relaxed. 

Now it is not a wrong or an improper emotion. But, this might lead to casual behaviour in loan repayment, which has its downsides.

If you rely on your guarantor more than usual, you may not make the full or timely payment. Yes, your guarantor will cover your back, but that can end up lowering your credit score even more.

On the other hand, a no guarantor loan can improve your credit score as you are going to be serious with the repayment, which will naturally influence your credit score to make it go high. 

Can You Rely on Your Guarantor?

This is a real problem.

It has been discussed that a guarantor can suffer problems when the deal is about to be made. 

But, it is highly possible that the guarantor can experience sudden issues regarding finance or personal life individually. 

There might be other consequences like death or other complexities that appear suddenly.

A guarantor can have problems in the middle of the loan term or at any time during the loan terms. Although you choose a guarantor as a backup option, the absence or the discontinuation of a guarantor will indeed have no such plan B for you. 

Instead, you can keep the borrowing between you and your lender and be free from these worries. 

Not all Guarantor Loans Come with Low-Interest Rates 

Do you think that all guarantor loans come with pocket-friendly interest rates?

A loan is given against a lot of conditions. Your credit score is taken into consideration, and your financial behaviour, loan amount, debt-to-income ratio, and a lot of other information are used to disburse the loan amount to you and finalise a monthly repayment term (or other sorts of terms). Your income statement is involved.

When a guarantor for the loan, all these points are to be checked from his or her side too. 

But here's the problem. If you or your guarantor have unfavourable financial conditions, you might not get a friendly interest rate.

But if you choose no guarantor loans, the loan terms will be set according to your income. Bad credit is not always going to be a problem for that.

To Conclude: Guarantor Loans CAN BE SLOW 

Since guarantor loans involve verifying the financial details of you and your guarantor, it might be a lengthy process.

It is because the data from you and your guarantor are not only collected but are also considered side-by-side to offer you loan terms.

Personal loans with no guarantor are needed to avoid this problem.

Since it is your financial details and fewer parties are involved, your lenders give you approval within minutes, and you receive the funds on the same day (by 24 hours).

So, if you are interested in a no-guarantor loan, then find yourself a direct lender first.