Rather than being some mark of monetary failing, or a loaded gun for the young and inexperienced, they can help to advance your aspirations, providing you with the opportunities you need to truly expand your horizons.
One very interesting form of borrowing comes in the form of guarantor loans. It is ideal for those who would struggle to obtain credit on their own merits, due to youth, past misfortunes, or a non-existent credit history.
Indeed, for those exploring their borrowing options, it’s well worth considering. Here are just three of the numerous advantages that it could confer on you…
1) Guarantor Loans Pose a Low Risk to the Borrower
The primary appeal of guarantor loans is often the minimal risk that they pose to the borrower. As a result, they’re frequently the loan of choice for the young – specifically, those whose parents wish to safeguard their financial futures and stop them from building up a history of indebtedness.
The mechanisms behind them mean that, should you find yourself unable to meet repayments, you will never be at risk of losing your home or other expensive possessions, and recourse will be sought from your guarantor before any private action is taken against you.
2) Guarantor Loan Lenders Will Consider those with a Poor Credit History
Another attribute that lures many borrowers to approach loan providers is their willingness to lend to those with a poor credit history.
Financial misfortune in your past does not mean that you’ll make the same mistakes again, but it does mean that you pose a greater risk to lenders, so many won’t even consider you. However, with the surety of a guarantor, such an issue is negated, and a poor credit history can be overlooked thanks to the assurance of a secondary party who’s willing to cover your debts if you can’t.
3) Guarantor Loans Often Carry Lower Interest Rates
Thirdly and finally, guarantor loans often appeal on the basis of their interest rates. Alternative forms of credit that are extended to those with a poor or non-existent credit history tend to be high risk for the lender, and carry incredibly elevated interest rates. Guarantor loans, however, buck this trend, and thanks to the negation of risk, their rates tend to be no higher than those of ordinary loans.
If you’re in search of credit, could a guarantor loan be suitable for you?
Featured image courtesy of FreeDigitalPhotos.net