What If I Cannot Get A Guarantor?

What If I Cannot Get A Guarantor?

There can be times in life when you are applying for a loan, or possibly looking to let a place to live, and the bank/lender or the landlord requires you to have a guarantor.

If you are applying for a guarantor loan, not being able to get a guarantor is going to pose a problem. The reason for this is that guarantor loans are based on two main factors:

* Affordability: You having a source of income and showing you can afford to repay the loan.

* A guarantor: Someone you know who is guaranteeing the loan, and in essence stating if you failed to pay a payment, they would pay the payment.

So not having a guarantor for a guarantor loan, presents a problem.

If you say you cannot find a guarantor or cannot get one, you may want to ask yourself a few questions, such as who do I know:

* Friends

* Family

* Work colleagues

All of these can be a guarantor, and they do not necessarily have to be homeowners. They can be tenants as well.

They just need good credit, and to know you, and not be financially linked to you already.

But let’s say you have tried to find someone to be your guarantor, and you simply cannot find anyone, what then?

We need to look at what it is that is requiring you to need a guarantor in order to get approved for a loan. It would not be affordability, as if a lender feels you cannot afford to repay a loan, having a guarantor does not suddenly make the loan more affordable.

If you had a spouse or partner and affordability appeared to be an issue, the lender may request your spouse or partner, if they are also working, be a co-signer on the loan.

Two borrowers, both with an income makes the affordability ratios better.

The main reason a lender will require a guarantor is that the main borrower may have have bad credit in the past, or possibly no credit.

No Credit: Establishing a credit history if you have no credit is not too difficult. There are credit building accounts and credit cards offered with low credit limits, to allow one to establish themselves in the world of credit.

Credit building accounts are a good start to getting credit, as well as having a current account, and a savings account.

Bad Credit: Having bad or poor credit is another reason why a lender may require a guarantor for a loan to be approved.

The first thing to do is to get a copy of your credit history so you can see what is being reported, if there are any errors or omissions, you can get this corrected.

If you have open CCJ’s, or unpaid accounts in collections, these need to be paid and satisfied to help your credit score.

Getting on the electoral role will help with your credit score as well.

There are more tips to increase or raise your credit score here.

Landlords Requiring a Guarantor

When you go to let a place to live, most private landlords require a deposit, which is usually made up of first and last month’s rent, or in some instances six (6) weeks rent as some landlords break down the rent into a weekly figure.

There also can be numerous other fees that Estate Agents and landlords charge when letting a flat or house.

Fortunately, many of these fees are being banned as of this June with the new Tenancy Fees Act.

I you are attempting to let a place for the first time, meaning you have no history of paying rent, some landlords will require a guarantor, someone to guarantee the rent, should you not pay the rent.

Landlords requiring a guarantor is nothing new, but again, what can you do if you cannot find a guarantor?

Increase Your Deposit: While it may be difficult to save for, offering to increase your deposit, or paying three (3) or more months rent in advance can be an option. Some landlords will accept this.

References: If you have a rental history, getting a reference from your previous landlord, stating you have paid your rent as agreed, and you were a model tenant, is another option.

Insurance Schemes: There are some insurance schemes where as a tenant you pay an upfront fee for an insurance policy, that protects the landlord against any damages and loss of rent. In some instances the landlord may suggest this option.

Find a Different Place: If you cannot get a guarantor, and the landlord is adamant you have a guarantor, then you may need to move on, literally, and find a different place to live and a different landlord.

Obviously, if you can find a guarantor for a loan or a place to live, if a guarantor is required, is the easiest route, but there are other options.

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<strong>What is Our Criteria For Applying?</strong> 
Every lender on our website has their own specific criteria by the basics are mentioned below and you must have a guarantor to be eligible. Simply select the lender of your choice and you will be taken directly to their website where you can apply. You will be required to submit your details including:<li style=”text-align: center;” data-mce-style=”text-align: center;”>Name (must be over 18 as the borrow, 21 or 25 as the guarantor)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Residence (your chances will improve if your guarantor is a homeowner)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Employment status (must be employed or on a pension)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Income (earning at least £600 per month and able to make repayments)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Monthly expenses (not have too many loans open or in major debt)</li>
You will then be asked to include the details of your guarantor and as mentioned above, this is usually someone who you know and trust and wants to help you with your personal finances. Ideally, a guarantor with good credit will maximise your chances of being approved based on the idea of ‘if someone with good credit trusts you, well we can too.'<strong>How Much Can I Borrow From Guarantor Loans?</strong>Guarantor Loans gives applicants the chance to borrow £500 to £15,000 depending on the lender. Some lenders we feature like Buddy Loans only have a maximum loan value of £7,500 and TFS Loans is the only lender that stretches up to £15,000.Factors that can influence the amount you can borrow revolve around having a good guarantor. One that is a homeowner, with solid employment, income and good credit rating will maximise your chances of borrowing the largest drawdown possible.The lenders featured on Guarantor Loans see a homeowner as someone who has already gone through the rigorous process of credit checking and affordability and if they can afford a house, they should be able to act as a guarantor for you.By comparison, having a guarantor that is not a homeowner offers slightly less security and means that amount you can borrow is slightly less too.Higher amounts may be available to those who already have a better than average credit rating, are homeowners themselves and a repeat customer with the lender who has already paid their loan on time. To apply directly with your lender of choice see <a href=”” data-mce-href=””>direct lenders</a>.<strong>What Does The Guarantor Have To Do?</strong>Upon completing an application, the lender will typically send you a <a href=”” data-mce-href=””>pre-contract loan agreement</a> and SECCI (Standard European Consumer Credit Information form) which will highlight the terms of your loan. You and your guarantor will be required to review the terms of the loan, including the loan drawdown, fees, repayment dates and responsibilities – and this can be signed via an online verification process using your email and mobile phone.The lender will usually carry out an individual phone call with you and your guarantor to ensure that you both understand the responsibilities and what is required of you – notably that if you cannot make repayment, your guarantor will be required to pay on your behalf. Further to some additional credit and affordability checks, funds can typically be transferred within 24 to 48 hours (or sometimes on the same day).<strong>Are Guarantor Loans Available For Bad Credit Customers?</strong>Yes, even if you have a history of adverse credit, <a href=”” data-mce-href=””>CCJs</a>, bankruptcy or IVAs several years ago, you can still be eligible. The idea is that you are using your guarantor and their financial history to ‘back you up’ and give your loan extra security. However, it is noted that your guarantor should have a good credit score and consent to co-signing your loan agreement.<strong>How Soon Can I Receive Funds?</strong>Guarantor Loans works with lenders that can facilitate funds within 24 to 48 hours of approval, or sometimes on the same day.When your funds are successfully transferred, most lenders working with Guarantor Loans will send the full amount to the guarantor’s debit account first. This is a standard security measure carried out by lenders to ensure that the funds are going to the right person and confirms the involvement of the guarantor. The guarantor usually has a ‘two week cooling off period’ where they can decide to pass on the money to the main borrower or they can change their mind and return the funds with no extra charges.