Millions of people often need loans to cater to different circumstances in their lives. From getting out of a bad loan to purchasing a new car, and much more, the list goes on. While there are so many loan options nowadays, achieving one is not as easy as one may think.
There are several circumstances that may restrict you from receiving a life-changing loan. A guarantor can be the ideal help you need in such times. They can ensure the loan payments to the lender in the event of the borrower’s inability to pay.
If you are wondering how a guarantor can help you, here is all you must know.
What is a Guarantor Loan?
A guarantor loan is an unsecured personal loan that requires a guarantor to support the borrower’s application. As you dig deeper into the difference between a guarantor vs cosigner, you will learn that a guarantor agrees to repay the loan if the borrower cannot do it by themselves.
According to Lantern by SoFi, it can provide surety to the lender about getting back their money one way or another.
Since both the borrower and the guarantor are jointly responsible for the debt, the lender feels more confident with lending a certain amount to the borrower regardless of their credit history or financial prospects.
You can choose your guarantor by yourself. It can be a friend or a family member over the age of 21 with a good credit history. These requirements can vary from one lender to the other. However, the guarantor cannot have any financial link to the borrower.
Benefits of a Guarantor
Many people consider how guarantors actually help you get a loan. Understanding the benefits of having a guarantor by your side can help you find more reasons to get a guarantor on board to streamline your financial matters.
Ease of Mind
In a time where every lender denies you service, finding a ray of hope in the form of a guarantor can be a big relief. These guarantors give the lenders a guarantee that you will pay back the amount in due time. If not, the guarantor will be responsible for paying back the lender.
Borrow Higher Amount
Imagine being just a few hundred dollars short of buying your dream house or finalising the purchase of your dream car. It can be a disheartening feeling. The good news is that you can make your dreams come true with the help of a guarantor.
Bad credit and several other factors may limit your reliability in the eyes of lenders, and they may only lend you a certain amount. However, you can increase your potential with the help of a guarantor.
Improve Your Credit History
The importance of a good credit history cannot be undermined in today’s fast-paced world. You may think that there is no way to rise above a bad credit score, but that is not true. A loan with a guarantor is your opportunity to redeem your credit score.
By ensuring timely repayment of your loan with a guarantor, you can redeem yourself and be eligible for loans without involving a guarantor.
