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Taking Bank Loans To Resolve Financial Woes

Key points

  • Obtain short-term loans with no guarantor from UK direct lenders.
  • Get access to funds the same day you apply, with the entire process done online.
  • Use funds to consolidate debt, pay bills, home improvement or anything else.

Borrowers who were not able to meet the lender’s criteria often ask assistance from a guarantor. A bad credit rating, no credit history, or low income are just some of their common concerns. Having another person who can vouch on the loan seeker’s behalf increases the chance of getting approved, however, it’s not always an easy choice.

Unlike joint loans, the guarantor – or the other person who will sign up in the loan contract – will not get any part of the amount. He will not share the responsibility of repaying the loan rather, will handle the entire loan amount should the principal borrower defaulted. So before you get bank loans and seek another person to co-sign the loan agreement, understand how guarantor loan works.

Guarantor’s Role In Bank Loans

Finding out what a guarantor loan exactly is and how it works should be your primary concern before you take out the actual loan. From the name itself, it will demand another person who guarantees the loan in the event of default. The second person can be anyone who is not financially linked with the borrower; it could be another family member, colleague, or a friend.

Unlike short-term loans, the amount offered in bank loans is bigger, ranging from £1,000 to £15,000, depending on the borrower’s financial status. Bad credit borrowers are often provided with a small loan amount while those who have excellent credit remark can acquire a larger fund. It is payable within 1 year or up to 7 years, depending on the loan’s terms and conditions.

Bank loans use a trust-based system; it has been used a long time ago and is still a common practice for mortgage companies and landlords.

Borrowers who are having a hard time getting bank loans often turn to guarantor loans. It can be acquired by anyone but it ideal for anyone struggling to be approved. Therefore, before you submit an application, ask yourself: Are you constantly rejected by banks? Do you find it hard to get the lender’s approval? Are you suffering from a bad credit rating? These cases are often best resolved by getting a guarantor loan. Aside from higher approval rate, you can also borrow a bigger amount regardless of your credit rating.

bank Loans, Taking Bank Loans To Resolve Financial Woes

Who Can Be The Guarantor?

Almost anyone can be a guarantor unless it’s the spouse or anyone financially-liked with the borrower. However, the cosigner should be not less than 21 years old, with an excellent credit rating, a UK homeowner and/or with a high income. Usually, no collateral is involved because the guarantor itself is used as the safeguard against the loan.

Bank loans company will conduct a credit check beforehand, for both the guarantor and the lender. Both parties will also provide a proof of income, bank statements, and valid IDs. If you’re asked to become a guarantor, be sure to understand its role and liabilities first. Although your obligation is barely visible all the time, the consequence is huge in case the borrower failed to settle the loan.

So before you agree to become someone else’s guarantor, assess the borrower first. Find out if they are capable and responsible to get the loan, their purpose of getting bank loans, and their credit history. After all, your finances are not the only thing that’ll be affected but your credit report as well. If you fail to repay the loan, you will receive a lower credit score.

If you want to reduce the liability, you can actually limit it. Instead of choosing an “All Obligations” guarantee, you must ask for a “Limited Guarantee” so you will not cover all the expenses. Basically, it means guaranteeing a limited or smaller amount.

Meanwhile, if you have already signed up as a guarantor and at some point, you have second thoughts and you wish to get out of the situation, you need to consider a few things first. Your credit score may be affected unless your reason is valid. Below is a scenario wherein a guarantor wanted to leave his obligation:

Man A was asked by a close friend to become a guarantor and he can’t simply say no. However, it wasn’t long until he realized that it wasn’t a smart move, considering that the principal borrower may have a chance to default on the loan. However, he’s worried about the consequences in case he gets out of the loan contract. He finally knew that being a guarantor is difficult and failing to follow the agreement may result to a lower credit remark, CCJs, and the worse of all, difficulty in having your own loan application approved in the future. The question is, is there a way out?

Luckily, there is and below are four conditions that may be considered by the bank loans provider:

  1. Providing An Alternative Guarantor For The Loan

Getting your credit report intact when you want to quit your role as a guarantor is important and one way to do this is to have a substitute guarantor for the loan. The new cosigner should be convincing enough; therefore, he needs to have positive credentials; otherwise, you cannot free yourself from the loan agreement. Therefore, the new cosigner should have the same or at least excel the criteria you have.

  1. Having An Additional Loan Without Your Knowledge

As the guarantor, the borrower should inform you about his financial plans. Therefore, in case the loan seeker applied for a new account on top of the original amount and without your consent or knowledge, you can ask the lender to opt out of the bank loans. This may reduce your liability but you are still in charge of repaying the original amount should the borrower defaulted.

  1. Remind The Borrower To Settle The Loan

If the first two options are not possible, the only way to free yourself from the responsibility is to ask the borrower to settle the loan. This will help avoid late payments and defaults. This may not get you out of the bank loans but it will provide a relief knowing that the loan seeker will take care of the loan.

bank Loans, Taking Bank Loans To Resolve Financial Woes

Bank Loan FAQs

Do lenders offer same day pay outs?

Yes. A number of lenders understand that applicants usually need cash urgently, so funds are made available within an hour or two at the most. The speed of payout can depend upon the amount being borrowed and any subsequent checks that might need to be undertaken.

Are there application fees to pay?

No. None of the lenders who contact you will charge you any form of upfront payment or application fee. By using the Vamoola site you will only be connected with trusted UK direct lenders.

Can I get a loan if I’m unemployed?

Yes. Many lenders will be willing to work with you to provide the funds you need if you’re unemployed. You will still need to prove you can make the repayments as part of responsible lending.

What can I use my loan funds for?

Loan funds can be used for anything you like, such as debt consolidation, emergency home or car repairs or even a weekend getaway. It’s recommended that you borrow enough to undertake your chosen task and no more to keep repayments down.

Are individuals with bad credit histories allowed to apply?

Yes. These days, almost anyone who needs an urgent loan will be able to apply for one. High acceptance rates make this type of lending popular with those with a poor credit history.

Can I apply online for my loan?

Yes. The entire loan application process will be completed online. Simply complete our online loan application form and view the loan options available to you.

Representative Example

Representative example of the total cost of the loan, including all applicable fees – Typical loan size of £25,000 over 120 months = £275.82 pm, 4.35% Variable APR – 6% (including £1800 in interest) total repayable £33,098Maximum Annual Percentage Rate (APR) – approx. 24% (lender starting rate 18%) – Typical Apr will be around 8%

*We are not a lender, we provide a free credit brokering service. We will never charge you a fee for using our application.
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Warning: Late repayments can cause you serious money problems. For help, go to moneyadviceservice.org.uk