Many people (mainly those with bad credit history) almost immediately opt for a guarantor loan when they require. While there are many benefits to this type of loan, there are also cons. Cons come with everything in this life so when it comes to any monetary transaction, you can rest assured that there will be a few drawbacks.
What you have to do is weigh the pros against the cons and see if the loan is worth it in the first place. If it is, you can go about seeing how you can best avoid all the drawbacks that guarantor loans in UK come with. It takes quite a bit of thought and planning. Never make uninformed decisions of this sort, it never works out well and if you are not prepared, you can find yourself in a mess, even before you know it.
The cons of guarantor loans:
- The first problem you may encounter is finding a guarantor. It is probably the hardest step. It will require a really strong friendship or relationship with another person in order to make sure that they are ready to become your guarantor. They will ensure that your loan will be repaid if for some reason you fail to do so. Even though this is a last option for a bank, it still requires that kind of security from a guarantor.
- You can not have a guarantor with bad credit. He or she has to have an absolutely clean credit file with no defaults or anything as such. This in itself can also be rather difficult to find with most people.
- The biggest factor is the fact that the guarantor will be held responsible if anything goes wrong. This is a rather big responsibility, especially if at that moment the guarantor is financially not sound enough to make up for the borrower’s shortcoming.
- If the borrower defaults and if the guarantor is in a difficult position, this will hurt the relationship and create quite a rift because all the trust that you once shared will be lost. The borrower considers someone as a guarantor only because he has assurance and trust upon him. Failing to keep the trust can affect the relation.
- The guarantor involved with the guarantor loans in UK will only be freed from his responsibility once the loan is paid back. This can take quite a while and the guarantor will have to always stay aware of the borrower’s financial condition and be financially ready to avert the short comings. He will also not be able to take loans of his own with the responsibility on his shoulders.
Let us be of assistance:
At Guarantor Lender, you will be able to understand the entire process and access the best lenders for guarantor loans in UK. At www.guarantorlender.com, a loan calculator is there to help you calculate exactly how much you can avail of and what your interest rates and other necessities will be in the process.
A situation of bankruptcy disrupts your life upside down. Many people reach a point in life, where they may be declared bankrupt. There are several repercussions that you have to face because huge unpaid debts do not offer you a smooth getaway. You have to go through a painless exit somehow with the help of IVA debt solutions that have become extremely popular these days. The severe repercussions of bankruptcy are that once you are declared bankrupt, it creates a black spot on your credentials. You may not ever get a loan or mortgage, bank account and mobile contract. It makes your life difficult, stressful and financially disturbing. Bankruptcy is not only a loss of money but also a loss of self esteem and respect.
What can you do to avoid them? Go back to your past; you may discover that you could have avoided bankruptcy. Firstly, bankruptcy is a result of over-commitments. Do not over-commit yourself in terms of repayment of loans. You should burden yourself only to such an extent allowing you to lead a smooth and standard life. Secondly, always remember that the future is not in your hands. Unpredictable events can lead you to downfall. Hence, be alert and prepared for such events and save money for the future.
Even after taking the above aspects into consideration, you may still fall into the trap of bankruptcy. For this, you can also seek the support of IVA. The debt solutions are less painful than bankruptcy. They do hurt your credentials, but not for a lifetime. The availability of debt solutions and bankruptcy is not a ticket to commit mistakes. It calls for a bad phase in life. They should always be considered as the last resort when you have nothing in hand and your debts are mounting exponentially. Try to achieve equilibrium in life and manage your funds effectively. Prioritize your expenses into urgency, needs, desires and luxuries with an effect of your ability to pay. You get lucrative options in life such as buy now-pay later, credit cards and installment facilities that make you feel you can pay in the future. But it does not mean you mess up your life.
IVA gives an option and saves you from drowning into a well. You can avoid bankruptcy by opting for IVA if you are a citizen of England. To know more about debt solutions agreement, you can click on this link http://www.ivaplan.co.uk/. Here, you get an opportunity to repay your debts in accordance with the affordability. The insolvency practitioner, after analyzing your financial assets and source of income, decides upon a monthly affordable payment to be paid for five years to the creditors. For such matters, you also need the approval of the creditors. A proposal is designed by the insolvency practitioner who meets all the creditors and discusses upon the mentioned clauses. Creditors are open to give their suggestions and confirm their approval. If debtor does not give consent to the said changes by the creditors, they would not be incorporated in the agreement. If 75% of the creditors approve the proposal, the agreement is enforced legally.
A personal loan can be defined as borrowing an explicit amount of money for whatever the purpose and reason the borrowers have. Grounds might extend from buying luxurious goods and products, business ideas, medical issues and many other personal choices and decisions. In personal loans, it can grant a means of realizing what you need and wants at hand by allocating you time to repay in time.
There are two types of a personal loan, which are secured loan and also unsecured loan. A loan can be defined as secured if one makes use of an asset as a means of a collateral or security, with regards with the loan. If in case the borrower would not be able to continue in paying the amount loaned, the creditor or lender would have the power to take the asset in collateral.
Why do lenders require collateral for secured loan? One of the grounds for presenting an asset as precautions is needed because for instance, they have an item to which of value that can be repossessed in case you can’t pay them. Since you also have collateral, a positive point would be a lower interest rate because it is viewed and doesn’t have a direct impact at risk to the lender. In personal loans, payments are considered to be fixed and would not change until you repay the loans, and that would give you an idea on how you can manage and budget more precisely.
Some types of secured loans are Mortgages which is related to real estate properties. Since the property asset is promised as collateral, it can guarantee a lesser interest. This loan is considered a long-standing financing plan that can extend repayment in terms of 15 up to 35 years. There are also different kinds that fall under the category of mortgages such as fixed rate, interest, balloon and adjustable loans.
How about unsecured loans? These are loans that can provide you available cash for instance that you can’t give assets as collateral. Reason some resort to unsecured loans is for home remodeling, trips and holidays and other personal motives. It might be a good option for those who don’t have any asset to back up their loans, but since it poses a greater risk for the lender there would be a great difference between the interest in secured loan and unsecured loan. The interest here would be higher and would give you a negative credit history if in case you would not be able to secure the payments needed. You may also try to research some good lenders who can provide you better and aggressive rates if in case you have chosen unsecured personal Loans.
Which one should you choose? You have to check first if you have the necessary assets as collateral, if you don’t have one, unsecured loans might be for you. If you’re sure with no doubt and certain in obtaining loans, you can visit this site LogbookCalculator to give you an overview regarding loans.