If you’re looking to find out the differences between a loan with a guarantor and one without then this is the place for you to start.
Loans and credit are common-place today, traditionally you would apply for a loan by your self and a lender would determine whether to lend you the money based on your previous credit experiences and how you managed them (along with other relevant factors). A loan involving a guarantor differs from this because your credit experience isn’t the main factor used when deciding whether you can borrow the money or not, this is what makes it a great solution for people who can’t get a standard unsecured loan either through poor credit history or adverse circumstances in their lives (e.g. employment history or residential status).
Loans With a Guarantor Requirement
These are the main types of loan offered by Guarantor Loans Company (although we do standard loans as well) and they have a number of advantages for many people. Instead of relying on computer generated credit scoring measures, you will be asked to provide a friend (or family member) to support your application. If someone is happy to support your application and trusts you can repay the money, then that can ultimately mean more to us than a “meaningless” credit score would when deciding whether to accept your application.
Best Suited For
- If you’ve been turned down elsewhere
- If you’ve never held any credit in the past
- If you’ve managed credit commitments poorly in the past or missed some payments
- You’re looking for a competitive product that is far cheaper than short term alternatives
- You want fixed repayments over up to 5 years
- You know someone who will be happy to be your guarantor (also called a guaranty)
Loans Without a Guarantor Requirement
This is the type of loan which has been around since the dawn of credit and how most types of loan operate (i.e. unsecured loans, short term loans, hire purchase). Loans are available with fixed repayments are are usually payable over (up to) 5 year terms. Without a guarantor being involved in the loan, the decision to lend you the money will be based entirely on your credit record and current financial situation. If you’ve managed your credit poorly in the past (or have never held credit), whether through fault of your own or not, your chances of being accepted will generally be lower than if you applied for a guarantor based loan. Likewise, if you’re currently facing financial difficulties or your current situation is viewed unfavourably by a lender, you may also encounter difficulties.
Best Suited For
- If you have a perfect credit record
- If you’ve held credit in the past and have managed it well
- You have a solid financial situation with secure income
- You want fixed repayments over up to 5 years
- You don’t know anyone who would be willing to support your loan application
Summary
If you are in a situation where you can apply for a standard loan and you have found a cheaper rate than what you may find with a guarantor product then you may wish to consider applying for a standard loan first. If you find yourself being turned down for these loans, then you may wish to consider a guarantor option.
If your circumstances fit more in line with a guarantor based loan and you’re happy with the terms and competitive repayments on offer, then you may be best to apply for this first (as every application you make for credit leaves a “negative” mark on your credit record). Once you’ve applied, full terms and details will be given to you before loan completion and you are welcome to change your guarantor at any stage before the loan is paid out.
You can apply for both loans with a guarantor requirement and loans without using our secure online application. Just specify whether or not you have a guarantor to determine which type of loan you are applying for! Simple.