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What makes the ideal guarantor for a guarantor loan?

In this blog we are looking at guarantor loans and what makes the ideal guarantor to help secure your guarantor loan application?

A guarantor loan in its simplest form is a loan that is backed up by having someone who will vouch for you should problems arise. They will be required to repay the loan on your behalf should you ever default on the loan agreement that you sign when making your application.

This means that the person guaranteeing the loan will need to trust you implicitly because they will be responsible for the monthly repayments and any agreed interest on the loan. The details of what is required are fully conveyed to the guarantor before any monies are transferred. This ensures that the guarantor understands exactly what they are signing up for.

So what makes the ideal guarantor for your guarantor loan application?

Someone you have known for a good length of time.

In order for someone to put themselves in a position of financial responsibility for you, it is often far easier if you have known them for a good length of time. These types of people are often good friends, family members or even a close work colleague. Either way, they will be the person who knows you the best and trusts your judgement. In many cases, they will already be aware of your situation and so when you ask for their help it will not be a huge surprise.

There are a few more requirements to someone being able to act as guarantor for you. They will need to be 25 years of age or older, an income of over £10,000 and they will need to have a UK bank account with a valid debit card. This is in part due to the fact that should the guarantor loan application be successful the funds will be transferred to the guarantor’s bank account, not the loan applicants. The guarantor will then transfer the funds to the applicant. They will also need to be a UK resident, which excludes the Isle of Man and the Channel Islands.

Is not already tied in on a financial agreement with you?

If you live with the person you are aiming to use as your guarantor they cannot already be involved in any form of financial ties with you. This means that if you have any outstanding loans or financial agreements with that person then they cannot be considered as your guarantor for a guarantor loan.

Has a reasonable credit rating

In order to be someone’s guarantor the person you choose will need to have a reasonable credit rating, although they do not need to have a perfect credit rating by any means. It is more about the affordability. Can that person afford to repay the loan on your behalf and continue to cover their own financial commitments? Many people think that the guarantor needs to be a home owner, which is not true, although they cannot be subject to a current Individual Voluntary Arrangement (IVA) or declared bankrupt.

So if you have someone who fits the above criteria then there is a good chance that your loan application will be accepted.

Click here if you would like to make a guarantor loan application with George Banco, fill in the simple form and we will do the rest.