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Are you considering a guarantor loan? For those who are not familiar with guarantor loans, they are loans that involve somebody guaranteeing the repayments in the event that the recipient of the loan can’t make them. (If you’d like to know more, check out our Everything You Need to Know about Guarantor Loans post.) If you’re thinking about applying for a guarantor loan, there are a few things that you should consider first:
#1. Applying for a guarantor loan- Do you need a guarantor loan?
This might sound like a bit of an obvious one, but the first thing you should consider is whether you need a guarantor loan. Now, we’re not asking you to consider whether you need to borrow the money, but whether you specifically need to apply for a guarantor loan.
If you’ve been turned down for loans or credit cards, then a guarantor loan might be for you. Or it might not – you might have been applying for the wrong loans or credit cards for your credit score.
The easiest way to do this is to check your credit score (we’ve written an article on how to do that for free) and to make sure that – if you’re applying for a guarantor loan – your credit score is bad. (If you have no credit score at all, then you also qualify.) If your credit score is fair or better, then you won’t qualify for a guarantor loan, and it’s better to find a loan that’s suited to you. (And getting rejected for a guarantor loan will hurt your credit score. That might – ironically – make you eligible for a guarantor loan. But let’s not get into that, it’s a bit confusing!)
#2. Applying for a guarantor loan- Who you might ask to be your guarantor?
Applying for a guarantor loan, it’s a good idea to sit down and think of people you’d like to ask to be your guarantor.
While, technically, anybody between the ages of 21 and 72 with a regular income can be your guarantor on a Bamboo loan, it’s a good idea to make sure that it is somebody that you have a good relationship with and who trusts that you can make the repayments. It’s also important that they’d be in a position to help you out, if necessary. (A good indication that they might be able to help you out is if they own their own house, although this isn’t a requirement.)
Remember, finances and money often cause friction and tension, even in the closest of friendships and relationships, so be sure that you think very carefully about who you’re asking, even if you don’t think that you’ll end up needing them to cover your repayments.
Finally, as we’ve said before, write down a list of people who might be able to help and the order you’d like to ask them in. You could ask your parents first, followed by siblings or grandparents, followed by close friends or other relatives. (And don’t put anyone under pressure.)
#3. How to ask them to be your guarantor
Of course, asking somebody to be your guarantor isn’t something to be taken lightly. When you’re preparing to ask your chosen guarantor, make sure you’re prepared with as much information as you can get your hands on. You want to be able to answer any question they might have – it’ll help convince them that you’re serious about the idea and put any doubts to bed. (Handily, we’ve put together a list of questions they might ask – check it out.)
Bamboo’s Top Tip: Although it is important not to pressure your guarantor into the decision, if they seem hesitant, remind them that around 80% of guarantors never pay a penny towards repayments at all.
Guarantor loans can be a great way to borrow large amounts of money while repairing your credit score at the same time.
At Bamboo, we offer personalised loan quotes that are tailored specifically to you and your circumstances. We show you how much you could borrow and how much you’d have to repay.
Plus, if you’re accepted, the money could be in your account the very same day. Representative 49.7% APR. A guarantor may be required. If you’re considering taking out a guarantor loan – why not get an instant quote today to see how much you can borrow? It’s quick, easy and leaves no mark on your credit history.
- Author Jack Barclay
- Posted 1 March 2017