If you need a unsecured loan but you have poor credit, CCJs or a history of credit problems, it can be difficult to acquire a loan. Sure some payday loan lenders and small cash loan lenders may be able to help you but usually the amount they can lend is limited to around £500 or so. If you need a larger loan say up to £3000 or so, most lenders are unable to help.
However there is a solution.
Guarantor loans are an ideal way of getting credit even if you have been turned down in the past. A guarantor guarantees payment of the loan if you should be unable to meet the repayments for any reason, so lending companies know they will get their money. The loan is still in your name, so you will be able to build up your credit rating, but the guarantor is added security for the lender in case there is a problem with paying back the loan.
Who can be a guarantor?
Most lenders require the guarantor to be over 23, a home owner and with a reasonable credit history. Often parents and other relatives are willing to step in to help, but remember if you default on the loan for any reason then they will be ones who are responsible for repayment.
What does the guarantor have to do?
If the loan is repaid on time, then a guarantor doesn't need to do anything. If however there is a problem with the repayments then the guarantor needs to step in to bring the loan up to date. The loan company will provide the guarantor with a regular statement of account so they can check the loan is being paid on time.
Do I need credit checks to get a loan?
No, as you have provided a guarantor it is not necessary to credit check you, however the guarantor will need to have a good credit history.
Is a guarantor loan a good option for me?
If you have a poor credit history then unfortunately there are few options open to you. Some lenders may be willing to lend to you but at a massively high interest rate as they are taking a risk. However because guarantor loans are effectively secured then the interest rates are generally quite reasonable making them a good option for mid value loans.