What is a Guarantor loan?
A debt consolidation guarantor loan is where the borrower applying for credit cannot get approved in their own right, but knows someone with a good credit rating who is willing to co-sign the credit agreement – the guarantor.
How does a Guarantor loan work?
Both the borrower and guarantor sign the credit agreement.
As for a standard Debt Consolidation loan, when re-payment arrangements are set-up, banking details are taken from the borrow to enable repayments by direct debit. In the case of a guarantor loan, a second direct debit is arranged with the guarantor’s bank to automatically take payment should the payment from the borrower fail.
If i miss a payment, will this result in a default?
No. If fact, a guarantor loan repayments has no bearing on the borrowers credit rating. If a payment is missed, then the guarantor makes payment. If the guarantor fails to make payments, then it is their credit rating at risk.
Who can be the Guarantor?
In theory anyone, in practice it is normally a family member, and usually a parent who is prepared to secure the loan against a property. However many guarantor loans are unsecured and guaranteed from just a friend.
Get In Touch Today, so we can discuss if such a method of debt consolidation is the most appropriate for your circumstances. Either call on 0800 048 3674, or use the form below.