Most people have heard of a guarantor Loan, but not many people are familiar with the operation of one or even what exactly it is. This may be a complicated thing to overcome if you are unsure what they are, how can you tell if you want to try to get one? These are some of the most frequent questions.
HOW DOES A GUARANTOR LOAN WORK?
Guarantor Loans are similar to unsecured loans since the borrower does not need to own a home since no collateral is necessary. The borrower is required to get another person to act as guarantor to them, usually because they do not have a prior credit history or have a bad credit history. On the other hand, the guarantor guarantees the repayment of the loan in case the borrower is not able to meet the monthly payments.
WHO IS ELIGIBLE TO BE A GUARANTOR?
Most of the time people generally use a close friend or a family member to be a guarantor. You should not have other credit items with this person, including bank accounts or credit cards. As well as they should have good credit, even if they think it is not necessary. They should be a homeowner as well.
WHAT DOES THE GUARANTOR DO?
The guarantor’s job is simply to provide a credit score that can be used to obtain a guaranteed loan. They will have to sign some documents and ensure they recognize what they are doing. Sometimes the lender may request payment receipts or bank statements. In addition, the just extra requirement in extreme cases will be when the borrower does not meet the repayments of their loans and the guarantor will be equally responsible for repaying the loan.
HOW FAST CAN I GET THE MONEY?
Upon receipt of signed documents, identification and payment receipts, the lender will process the application and then release the funds. In general, this takes less than 7 business days. Usually, if a decision is made about the loan, the lender enters all the documentation that was required and then the money is processed, then a loan check is generally sent to you. This takes less than seven business days as well.
IS A GUARANTOR LOAN UNSECURED?
Of course, a loan guarantor is fully unsecured, you will not be asked to present anything as collateral. It just requires that someone be your guarantor to be eligible and is your type of security.
If you can’t repay the guarantor loan, the lender will usually contact you by phone and via email to discuss the repayment. When you can’t pay the full amount for that month, you can analyze the possibility of creating a contract or payment plan with the company to make smaller payments every month. If you do not respond to the lender’s communications, fees and charges will be added to your account and the money will be automatically taken from the guarantor’s debit account.