Unsecured Guarantor Loans

Some lenders have really come to grips with reality and understood that interest rates of 1000% and in some case more are just not right for the long term. In order to offer you much lower rates they put together a different type of offering called a guarantor loan. These can be normal unsecure loans or payday loans.

How a Guarantor Loan works

What makes a guarantor loan special is that they introduce a concept called a guarantor. A guarantor can be anyone who trusts you enough to back your borrowing so that if you fall behind with your payments they will take over the payments. It’s a great way to borrow money if you have a bad credit rating and has the added bonus of helping you repair your damaged credit rating. Payday loans can be guarantor based or not, but you will get better and cheaper rates with a guarantor.

Guarantor loans are not just available for payday borrowers. Indeed anyone can get a guarantor loan, and this is really the core reasoning behind them. So long as the guarantor has a good credit rating and is willing to accept the risk that the borrower may pose then the loan is available to you. Naturally, you as the borrow should now want to make sure you do not go into arrears not only for your own credit rating but also for your guarantor.

Ultimately guarantor loans are for longer term loans and often for larger amounts than payday loans. This is largely because they are not based upon your pay day but rather a friends trust in you that you will pay the money back.