If you have a bad credit score but you want to borrow some money, we suggest that you check out a guarantor loan. However, it can be difficult to get one even if you have a guarantor. You can’t say for sure that you will get the loan. Given below are a few tips that can help you increase your chances of getting the loan.
Find a Good Guarantor
Keep in mind that the guarantor will work like extra security for the bank. If the primary borrower is not able to make the payments, the bank will ask the guarantor to make payments. Therefore, you may want to make sure that the guarantor has good credit rating.
Make payments on time
Remember: if you have a guarantor, doesn’t mean you can get the loan no matter what. The bank will still look at your credit rating to get an idea if you can pay the loan back in a timely fashion. Actually, the amount should fall within 1/10th of your monthly salary. This will help the bank make the deal.
Know the Risks
We suggest that you let the guarantor know the related risks and responsibilities. Who can be the guarantor? The guarantor can be anyone, such as your friend, parent, sibling or some other person.
If you are going to get the loan via a broker, you may have to pay the extra charges for the service. You don’t want to pay the unnecessary expenses. What you may want to do is go directly to the lender in order to avoid the additional expenses.
Choose the lender carefully
There is no doubt that you should not just choose any lender. It’s a good idea to ask several lenders for quotes. This will help you choose the best lender who you can apply to for a loan. Even if you have a bad credit rating, your guarantor will give you a chance to borrow from the lender.
Understand the Consequences
You may want to keep in mind that if you fail to pay back the loan, your credit rating will get effected. The entire burden will not be on you because you have a guarantor involved, but the rating will be reflected on your documents. If you already have a bad credit rating, you will find it harder to get a loan down the road. Aside from this, it will be even harder for you find a good guarantor.
Keep in Touch
We suggest that you keep your guarantor updated on the problems that you have with making payments. As a matter of fact, the guarantor and the lender will appreciate it if you let them know of the problems that you may have. They may help you deal with the problems.
Long story short, these are not the only things that you should keep in mind when applying for a guarantor loan. You may find other attractive deals based on the circumstances that you are in. What you may want to do is go through the terms and conditions thoroughly prior to signing the documents.