If you don’t have the best credit history, getting an affordable loan can prove to be a challenge. But there’s now a slightly different type of loan, called a guarantor loan, that could help you to get around this problem.
Guarantor loans allow a second person to act as a guarantor. So, if you’ve got a friend or relative who is prepared to vouch for you, you’ll be able to lend on the basis of their credit history rather than your own.
A guarantor loan allows you to access between £1,000 and around £10,000 over a term of one to five years.
The rate of interest will be higher than a standard personal loan, but it’ll be much lower than high-cost alternatives, and you’re unlikely to face high up-front changes or arrangement fees.
Your guarantor can be anybody that isn’t financially linked to you, such as a spouse or partner.
Ideally, you want your guarantor to be at least 21 years of age, with a good credit history, and a homeowner in the UK. These factors help to convince a lender that the debt is in safe hands.
Some lenders may be more flexible about your guarantor, but you may end up paying higher rates as a result.
Why a guarantor loan? Firstly, they could help you to access the money you need at lower costs than you might find elsewhere.
If you have the right person ready to vouch for you, these loans could prove to be an ideal solution.
Secondly, they’ll help to strengthen your credit history at the same time, helping you to secure cheaper credit for yourself in the future.