Guarantor loans have become one of the most popular loan types of loan today and it’s very easy to see why. It is not always easy to obtain a loan and when you have trouble obtaining one, you might have to look at having a guarantor at your side. However, if you are the one being a guarantor, do you know what is actually involved in the process? Maybe it’s time you learned about the good, the bad and ugly sides of guarantor loans.
You Help a Friend Out
One of the great things about being a guarantor is that you can help someone you care out. If a friend has a need for a loan and you aren’t able to lend them money, you may be able to act as their guarantor so that they can acquire a suitable loan. That can be idea for a host of reasons including the fact that you’re helping someone out. guarantor loans online are very popular and being a guarantor is a lot easier than you think simply because you don’t have to technically do anything apart from sit back and hope the borrower pays the money back!
You Might Find Yourself on the Receiving End of the Lender’s Demands
Your friend has every intention of repaying the loan now but what happens if they lose their job? Well, if that happens and they are not able to pay, it’s going to be you that the lender comes looking for their money from. That might sound unfair simply because you didn’t borrow the money and never received any of it but, in truth, when you signed up to be a guarantor you technically took on that responsibility. It’s the bad side of guarantor loans but, of course, this is only really a concern when the borrower fails to repay. Most borrowers will pay but it’s a risk nonetheless.
Your Credit Might Get Ruined
If you want the whole worst case scenario then you have to understand and know there is a risk of you ruining your credit. Yes, this is something which most people don’t seem to know or think about when acting as guarantor but it’s time you learned about it. If the borrower fails to repay and you are not able to repay, you will find it’s your credit which is ruined. What’s more, even if you are making payments, your credit can still take the hit. A lot of guarantors aren’t aware of that when it comes to getting guarantor loans online.
Risks and Rewards
There are always going to be risks involved with loans and while some guarantors are put in the rubbish by the borrower, it doesn’t always have to be that way. Yes, some borrowers are useless and only in it for the money but your friends don’t have to be like that. You can in fact find being a guarantor to be a very rewarding thing if it means helping out someone you care for. Guarantor loans can be a very useful idea and there are lots of lenders available too—just make sure you trust your friend!