If you have been considering a guarantor loan one of the key factors in the process is finding a guarantor to support your application. In this blog we are looking at who to ask and what you can do to explain what is required of them as a guarantor.
When you start looking for someone to ask to be your guarantor, the best place to start is with your family and friends. There will need to be a high level of trust between the two of you as the financial agreement you are looking to enter could potentially affect both of your credit histories.
What are the criteria your chosen guarantor will need to meet?
In order to find the right guarantor, should you wish to make an application, the person in question will need to be 21 years of age or older and they will need to have a UK bank account with a valid UK debit card.
The guarantor will also need to have a good credit history and not currently be subject to an individual voluntary arrangement (IVA) or bankruptcy order.
They will need to be a UK resident (excluding the Isle of Man and the Channel Islands) and have a minimum monthly income of £1,000 after tax (inclusive of pensions).
The guarantor cannot be financially linked to you in any way. You cannot have any shared accounts or be married to them.
Above all they will need to be able to afford to make the repayments should you fail to make the repayments yourself.
If the guarantor you have spoken to agrees to help by applying to be your guarantor but pulls out before the loan is agreed then you will need to find an alternative guarantor before the application process can continue.
Who should you approach to find the right guarantor?
As touched upon above, there will need to be a strong level of trust between you and your chosen guarantor. In most cases the best people for the situation are family or close friends who are aware of your financial situation, or those who might normally assist you financially on occasion. Common examples could be parents, grandparents, siblings or even extended family members.
If family members are not available to be your guarantor then you can potentially look to close friends or even a work colleague or employer.
What will you need to explain to your chosen guarantor prior to making your application?
The first major question to answer is why you need to apply for a guarantor loan in the first place. You will then need to demonstrate to them that you can afford to make the repayments. The best way to do this is by writing it down or even using a spreadsheet to demonstrate your budget. This is a list of your incomings and outgoings – your income and expenditure – which will enable you to show that you can meet the repayments on your budget. It is something you will need to complete during the application process anyway, so doing this for your chosen potential guarantor is a good first step.
The last suggestion is to put yourself in their position and be brutally honest as to why they should act as the guarantor for your loan application. If you can confidently and factually answer that question, then you should be ready to find an appropriate person to support your guarantor loan application.