If you have not got a very good credit history (check here)? Hoping to take out a loan? A loan with 1Plus1 guarantor loans may be the answer.
Let’s take a closer look at guarantor loans and see what you need to know if you take one out.
Unlike a mortgage you take out together, it’s not a joint credit agreement, but you should treat it in the same way, because if you don’t keep up with your repayments, the person acting as your guarantor will be called on to pay.
Both you and your guarantor need to be clear about this before you sign the agreement. If you can’t pay your loan and your guarantor can’t afford to take over repayments, lenders can take legal action against both of you – even though the guarantor didn’t receive any money.
So, how exactly does a guarantor loan work?
As we said earlier, guarantor loans may be an option if you’ve a less-than-perfect credit history. If you have taken out credit and then been late or missed making payments, this blots your credit history. With a loan from 1Plus1, we may consider previous poor credit if you have a guarantor to fall back on.
This could be a family member, friend or colleague to guarantee your loan. You can’t ask your spouse, as it’s likely that you’ll already have financial ties with them. Here at 1Plus1 we carry out credit checks to ensure you can afford a loan and that you and your guarantor meet our requirements as responsible lenders.
You can ask almost anyone to be your guarantor, but it doesn’t mean you should. Carefully consider who has a close enough relationship to you to be willing to take over your loan repayments if you can’t.
You should both be fully aware of the terms and conditions. Keep in mind that if you don’t pay your loan and your guarantor has to pay, not only will your credit history be affected but your relationship could be too.
Maybe you’re not looking for a loan but you’ve been asked to act as guarantor for someone you know. You need to be sure you can <ahref="https://www.moneyadviceservice.org.uk/en/articles/can-you-afford-to-borrow-money">afford the repayments just in case you have to take over it’s a big responsibility.
Providing the borrower makes their repayments on time, a guarantor loan taken out by someone else will not show up on your credit history But, if they don’t, it could show up. If the lender takes any legal action against them, this could leave a mark on your records.
An alternative is borrowing the money from a friend or family member. You might come to an agreement together, and you could even draw up a repayment plan and then both sign it in front of a solicitor to make things more official.
If you think you may be interested in a 1Plus1 Loan, please give us a call on 0330 1200 313 and one of our friendly staff will be more than happy to discuss the process with you, or start your application here.