The undeniable fact is, at some point, you might want cash relief for one reason or the other. This could be due to an emergency, the need to inject more capital into your business or simply because you want to make an investment. Whatever the case, when such a time comes and you don’t have a healthy bank balance, the logical thing to do would be to go for a loan. In the past, getting approved for a loan was as a simple as convincing your banker that you are up to the task and will repay the loan or simply have someone vouch for you verbally that you are trustworthy and will ultimately repay the loan.
However, as years passed by, it became difficult for bankers and financial lenders to extend credit facilities based on the word of long standing customers they are familiar with and whom they trust. History has taught them that should things go south, getting their hard earned money proved a tad difficult. It is perhaps the reason why any financial lender in the contemporary society asks for some form of guaranteed relief enshrined in law. This form of contractually guaranteed relief actually guarantees the lender of their security should the borrower default on the loan. It actually behoves on the guarantor to bear the responsibility of the loan and hence no risk to the lender.
While there exist some misgivings regarding guarantor loans, the truth of the matter is that if utilised well, the said loans have long standing benefits to the borrower. It is, in all honesty, a perfect loan instrument for an individual with a poor credit rating to get access to credit with ease while at the same time working on rebuilding their credit history. That said, with all the different types of loans in the UK market, you might be in a dilemma as to why you should go for a guarantor loan. Well, look no further as this article endeavours to shed light on the benefits of guarantor loans.
- Faster processing and approval
Once the issue of a guarantor has been dealt with and the lender satisfied that the guarantor meets all the requirements, processing and approval of guarantor loans is fast so to speak. In fact, provided that everything is in order, you can expect to have cash in your bank account within 24 hours!
- Longer repayment periods
In comparison to payday loans or even doorstep loans, there is no denying that guarantor loans have a longer repayment period hence offering the borrower flexibility in how they budget for their finances. With payday loans and guarantor loans only allowing borrowers a couple of weeks in repayment, guarantor loans can even stretch up to 7 years.
- Your credit rating state is inconsequential
You probably wonder why I would make such an assertion in a world where credit scores are at the centre of everything. Well, how guarantor loans work is that so long as you have a guarantor with an excellent credit score willing to shoulder responsibility of repayment, your credit score status is of no consequence. However, this does not mean that you shouldn’t work on improving your credit rating!
- Opportunity to boost your credit rating
With guarantor loans, you get a rare opportunity to work on improving your credit rating. The secret is of course in ensuring that you make diligent payments without defaulting. This will of course reflect on your credit report which basically means that with time, you will be able to boost your credit score.
- Lower interest rates
Compared to other bad credit loans, it is correct to say that guarantor loans are the most affordable. With interest rates for logbook loans averaging at 400% and payday loans averaging at 100%, it is correct to say that with an average interest rate of 40-50%, guarantor loans are the most affordable!
In conclusion, while there are many other benefits of guarantor loans, the above mentioned stand out and should form the basis as to why you should go for guarantor loans as opposed to other types of bad credit loans.