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.