3 Situations Where you Might be Asked for a Guarantor
If you have bad credit or you are a young person with very little credit history to your name, it’s possible that at some point in your life you might be asked for a guarantor to be provided in order for you to proceed with some financial aspect of your life. If you’ve found this post because you’re wondering when this might be likely to happen, then let me try and explain by giving you 3 examples of situations where you may be asked to provide a guarantor.
When renting a house
When you go to rent a house, the landlord will more than likely want to carry out some form of credit check. This is not always the case as some landlords will rent a house out privately without requiring this, but if you rent a property through a letting agency then a credit check is usually required. If you have a CCJ, IVA or bankruptcy to your name or some other kind of bad credit on your credit report, then you might well be asked to provide a guarantor in order to proceed with renting out the property. In this case, your guarantor will be legally bound to pay your rent for you should you fail to make the monthly rental payments.
When taking out a loan
Another situation where a guarantor may be required is when you are taking out a loan and your credit score and history is not quite satisfactory to the lender. They may still be happy for you to have the loan, just as long as you provide some extra security. Whether you are approaching a high street bank or you are going through a specialist guarantor loan provider like SUCO, if you have bad credit or a lack of credit history then there is a good chance that the lender might request a guarantor.
When taking out car finance
Similar to taking out a standard personal loan, a guarantor might also be required when you are going for some other type of finance, especially for a high ticket item like a car. I would say that you are probably less likely to be asked to provide a guarantor for a finance arrangement than you would be for a personal loan, simply because with a finance arrangement the finance company will often have the right to take back the goods if you fail to make your repayments, which may not be the case with a personal loan. Don’t quote me on this one, though.
Extra things to consider
So there we have it, 3 potential situations where you might be asked to provide a guarantor if you have bad credit or a lack of credit history. It’s also worth mentioning that often times, when a person takes out some kind of guarantor credit, the interest rate attached to that credit will also likely increase, as guarantor loans are still perceived to be a higher risk to the lender than a standard, straightforward loan would be.
If you are considering becoming a guarantor for somebody then be sure to consider all of the potential financial implications of this decision before doing so, as many people don’t fully understand what it entails. On the flipside, if you are thinking about asking somebody to become your guarantor, then please be sure that you can definitely afford to meet the repayments or monthly rent amount to avoid any hard feelings or rifts occurring within your family.