Even with the economy roaring back after the dark days of the Great Recession, it is not always easy for everyone to secure a loan. This is particularly true for those with one or more blemishes remaining on their credit. Recent days have seen an uptick in media interest in the concept of guarantor loans for individuals with less-than-perfect credit.
If you are contemplating whether or not to seek a guarantor loan, it is worth weighing the potential benefits and drawbacks to this type of product.
Benefits And Drawbacks To Guarantor Loans
Wondering about the possible benefits of guarantor loans? To start, these products may be the most promising option if other lenders are likely to say no. There are times in life when securing a loan is critical, such as when your vehicle unexpectedly quits, and you have no way to get to work. Under such circumstances, the ability to receive funds quickly may be a matter of survival in terms of continuing to learn a living.
If such a dilemma is what you are facing, yet your credit history is negative, a guarantor loan can be the answer you need. These loans can help prevent you from having to turn to alternative options which often have exorbitant rates of interest.
Using the vehicle situation as an example, a guarantor loan can be a great way to go because it permits you to visit a car dealership with ready cash available. Not only is this likely to give you bargaining power in terms of the purchase price, it also keeps you from signing onto a bad credit financing contract which would almost certainly be far more expensive.
Potential Negatives Of A Guarantor Loan
Are there any possible negatives to getting a guarantor loan? One downside for many is the fact that applicants for such products will need to enlist someone who is willing to help get the loan. This could require a borrower to make embarrassing disclosures to the guarantor about why their credit is poor, why the need help and other similar facts. It may be necessary to put pride aside in such a case and make the request anyhow.
High interest rates may also be considered to a be a downside of guarantor loans. While these products tend to be less costly than a problematic payday loan, they are sure to come with a higher rate of interest than a standard personal loan from a typical bank.
In the end, the fact is that circumstances often present themselves which necessitate borrowing a certain amount of funds. Taking a guarantor loan now and resolving take active steps toward improving your credit standing over time can keep things running smoothly in the short term while helping to make more advantageous borrowing options available down the road.
Guarantor loans can give a much-needed hand up to those committed to making smart financial choices going forward.