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Guarantor loans for people with no credit history

Obtaining a loan initially is not always an easy and simple process. Banks and lending institutions are usually wary about people with no credit history, because it is hard for them to assess the person. This puts them in a bad risk category. The banks are unsure of that she or he will pay the loan back as there isn't any previous history to consider. There are ways around this and one solution available is a guarantor loan. To obtain a guarantor loan the applicant would need to find somebody that might be keen to operate as a loan guarantor. Countless people think that it's only family that can do this but anybody can act as a guarantor provided that they have a good credit history. Although most people will ask a member of family to help, close friends and even work colleagues can also become a guarantor.

Guarantor loans are not only used for people who have never borrowed money before, they works well for people with bad credit. If the loan is taken out sensibly and monthly payments are met on the loan without defaulting, they can use their guarantor’s good credit standing to help restore their own credit rating.

The person acting as guarantor will have to understand their exact position of this loan, they need to be aware that if the borrower defaults on the loan, it will be his or her responsibility to take over the payments until the loan is paid back in full. It's a risky position to be in and the guarantor must make sure they fully appreciate this. It might be sensible for the guarantor to have full access to the borrower’s finances such as: bank account, income, and monthly expenses this way he or she can make sure that the borrower has the capacity to pay back the loan.

The guarantor loan is an unsecured loan, there's a misapprehension amongst people that this kind of loan is more expensive than other unsecured loans, this isn't the case. These loans are not based on the applicant applying for the loan but the guarantor and his or her good credit history.

The guarantor shouldn't be worried about their valuable possessions if the borrower defaults on the loan as it is an unsecured loan. However in rare cases when no other agreement has been made for repayment of the loan it is often known for the creditor to take action through the courts to turn the loan into a secured loan but, this only happens when all the involved parties cannot reach an agreement and is normally only used as a last resort.

Despite this glowing recommendation about guarantor loans there are always other options. The best way forward is to look for a no upfront fee charging loanfinder in the united kingdom who specialises in no credit checks.

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