Guarantor loans require a third party; perhaps a friend or family member, to agree to be bound by the terms and schedule, should you become unable to meet
your settlement agreement. They are particularly useful for those people who have a poor credit rating, but have a good, stable income. The agreement is still
taken out in your name, but the third party is listed as having an interest. This person is usually required to have a very good credit rating.
It is a way of providing assurances to the provider that the full amount will be repaid.
The increase in computer technology that scores your credit at the point of an application has risen in recent years, and has meant that many of us struggle to
Guarantor loans somewhat get back to how the lending world used to work – based on real decisions by real people to help ensure the repayment.
If you are struggling to settle, you will generally get reminded; usually by text and email. Every effort will be made to help you, but if this is not possible for any reason,
then the monthly figure will be taken from your guarantor. In the unlikely event that neither you nor your guarantor can meet the repayment, then details may still be referred to a
debt collection agency, as with any other lending product. Please choose your
guarantor and check their financial stability carefully in order to prevent this!
This is a way of borrowing money whereby a friend or family member agrees to settle the agreement if you cannot. The guarantor needs to be a
homeowner who has had no trouble affording their bills, but don’t worry, their home won’t be at risk.
It is a scenario largely based on the old fashioned way of lending money, and safeguards all concerned against financial adversity. This type of product is
especially useful when you are working hard to rebuild your credit rating, but are not yet at a level where lenders feel you are able to repay. If you are
in stable employment, and your guarantor agrees that you will have the ability to meet your repayment, they will have their name listed on the agreement, and will be
responsible for the monthly commitment if you have difficulties.
A guarantor loan works in much the same way as an ordinary lending solution. The only real difference is that extra checks need to be made for your guarantor,
and if everything is OK, they need to sign your documents as well.
When you apply with iCashAdvance.co.uk, you get free use of our specialist matching software to find you an appropriate solution. Depending
on the answers you provide us, we will suggest different lending solutions for you to choose. Payday loans, for example, aren’t suitable for those of us
who have recently taken one out already, so if this is the case, you will not be presented with a payday loan as an option. If you have a less than perfect credit
history, and may struggle to obtain a longer term product, then this could suit you.
Not only do we have a responsibility to you to ensure that you aren't inappropriately lent to, but you have the must consider the following before
applying for a loan:
Implications of Late/ Non-Payment
Despite making every effort to budget for your repayment, most lenders understand that problems can occur. Most
lenders have the facilities in place to set up plans to help you, and whilst this may incur additional charges or interest,
it is much better than ignoring the requests. Whilst every lender has different policies, every month that you fail to make
repayments may result in the true cost of your agreement growing hugely due to the additional fees involved. A restructuring plan means that
these fees stop, and bar the interest, you only owe the outstanding balance.
You must contact your lender directly at the earliest sign of difficulties in being able to settle your agreement. Ongoing
problems mean that not only do you incur more charges and interest, but the provider has no option than to pass your details on to
collection agencies, which can be even more stressful.
Credit Reference Agencies
If your case is passed to a debt collection agency, finance providers can send the
details to a credit reference organisation. This means that a note is put on your credit report, so that future creditors
get a better understanding of your ability to settle finance agreements. All lenders have different policies regarding credit reports, so please read the
terms and conditions of your chosen provider carefully. Such notes can stay on your credit file for up to 6 years, so please make every effort
to meet your repayment before finalising.
With some lenders, by meeting your repayment on time, a positive note will reflect on your credit file - this means that you have a better
chance of obtaining future credit.
Renewal/ Extension Policy
iCashAdvance.co.uk do not recommend renewing your solution where possible. If you feel
you have budgeted your finances sufficiently to extend your agreement, then you must contact your provider as soon as possible. Please consider
though that this may incur an additional charge - please check carefully.
We work hard to ensure we don't partner with providers who have automatic renewal policies in place.
Once we have directed you to a provider, we urge you to check the terms and conditions carefully, to ensure that this is not in place. If it
is, you can request the cancellation of the renewal, but you must remember to do so. Failure will result in a further loan and associated interest and
charges, that you don't really need.
Why are they called guarantor loans?
A guarantor is someone with a good credit rating, owning a property, who agrees to be responsible for your repayments should your situation change,
and you become unable to do so yourself. They should be aged between 18 and 75, and should guarantee to be able to afford the monthly liability.
Do I qualify?
The qualification process not only depends on the suitability of your guarantor, as you still need to demonstrate the ability to
settle in the first instance. The guarantor is only intended as an extreme last resort. It is a very important and serious
commitment, and should not be entered into lightly by either partner.
You can receive finance even if you have less than perfect credit, so as long as you can demonstrate a regular income, and a UK address, then you fundamentally
can consider this as a viable option.
Who can be a guarantor?
Your guarantor needs to be a homeowner, who has a good credit history, and no defaults on any bills or loan repayments. Please think carefully about who
to ask, as they will be liable for your repayments, should you struggle to meet your monthly payments.
What is the maximum amount I could borrow?
Guarantor loans are generally taken out over a longer period of time than payday loans – usually up to 5 years. Therefore the amount you can borrow is
higher. As a general rule, you can borrow up to £5000. This amount can be higher, but is at the lender’s discretion, and depends
on your personal financial circumstances.
Can I top up?
You should not compare guarantor loans to shorter term borrowing products, because the purpose is entirely different. Guarantor loans are a way
of enabling those who struggle to obtain traditional, longer term personal finance to do so. They are not intended for one-off scenarios where we have
unexpected costs, but rather bigger events such as weddings, holidays, or debt consolidation (combining your existing debt in to one).
Monetary top ups are possible however, but this usually only becomes available when you have repaid a certain amount back on your original agreement. You can only do
so by obtaining agreement from your guarantor, who will need to countersign the new agreement.
When do I receive my money?
As a general guideline, funds are transferred within 48 hours. However if all checks on you and your guarantor are carried out with no problems, this
could be reduced to 24 hours.
Your application may be delayed if:
- You or your guarantor are not available should there be a need to speak, which is normal
- An item to prove your identity is required (e.g. passport, driving license, etc)
- Your application fell on a weekend or bank holiday
- The property your guarantor owns is in Scotland or Ireland
Can I repay early?
Again, this depends on your lender, but in most cases, yes, this is not a problem. The best part is, you normally won’t be charged a fee for doing so
Please read the terms and conditions of your lender carefully.
What if my guarantor is declined?
A guarantor is there to safeguard your lender against non-payment. Therefore they must be credit-worthy, and own their own home (their home is not at risk).
They will only be rejected if the criteria isn’t matched. If this happens, unfortunately your current application will be rejected. Don’t worry
though, you are free to apply again using a different guarantor.
Can I change my repayment date?
Usually your lender will allow you to change the payment date, but as a guideline, there are some general rules in order to do so:
- Your first repayment date cannot be changed – only subsequent ones.
- You need to provide 5 working days as notice of your request.
- If you have missed payments, you cannot change the date.
- You can only change your date 3 times, and once in any month.
- You can only change your date to a day in the month that it is originally due.
If you are having financial difficulties, please contact your lender directly, as they will be happy to assist you.
How will I receive my funds?
Normally once all the checks have come back OK, the funds are transferred directly to your guarantor’s bank account. The reason for this is to ensure
that there is no way someone can use their details without consent, and therefore covers all parties against fraud.
You can expect a text message once this has taken place.