Availing of a loan becomes necessary when unexpected expenses have disturbed your finances. However, it is not necessary as sometimes regular family expenses also dismantle the balance of your financial life. Therefore, numbers are good for those people who want loans to calm down the after-effects of that financial emergency.
Yes, everyone can obtain a loan, and there is no doubt about it. However, the primary question should be: can anyone qualify for a personal loan? Indeed, it is an important question because it has been found that many loan applications have been rejected for various reasons.
Loan eligibility is an integral part of an overall process. First, you need to analyse your eligibility conditions and then go ahead with the application process. As far as loan eligibility is concerned, there are four crucial aspects, which include:
Here, in this blog, we will throw light on the guarantor part. We will discuss the chances of increasing your loan eligibility if you add a guarantor to your loan application. What makes our discussion on loan guarantors different from other blogs is that we will analyse the guarantor factor with the help of the other three factors mentioned above. Isn’t it interesting?
Before going on the loan eligibility discussion, let us first understand something about the guarantor.
A guarantor is generally a person who is also involved in the loan process apart from the primary borrower. It does not mean that that person enjoys the same loan benefits. Instead, he owns the responsibility to repay the loan amount if the primary loan applicant defaults in between the loan schedule.
Due to the involvement of the guarantor in the loan process, sometimes these loans are also called guarantor loans in the UK in the direct lenders’ market. Yes, traditional lenders are there, but they make it mandatory to present a guarantor. On the other hand, direct lenders follow a different path, which is identified with their flexible lending norms.
Considering the importance of the guarantor’s role in the loan process, the lenders have set some guidelines for that third person, i.e. the guarantor. However, the guidelines may vary from lender to lender, but two are the most general ones.
By looking at the above discussion, there is no doubt that the guarantor’s presence during the loan application increases your chances of loan acceptance by the lender. Therefore, let us take our discussion further.
We have said above that we will discuss the significance of the guarantor in terms of other loan approval factors, such as collateral, income and credit score. Here, we are doing exactly the same thing.
You should have the resources to seek prompt and proper financial assistance from the lender. One of those is your personal asset. Many lenders, particularly the mainstream ones, make the collateral mandatory. However, it is also beneficial in terms of higher loan amounts and lower interest rates.
Despite those benefits, it is not always possible to secure a loan with a personal asset. You may lack the collateral, or you may need a small amount for which collateral is not needed. Instead of this, you can convince your loan provider with a person with a good credit history as your loan guarantor.
Lenders can get convinced on the loan repayments either from your end or from your guarantor. Therefore, it can increase your loan eligibility.
It is a bitter truth that not everyone enjoys a full-time or stable monthly income. There are many individuals in the UK living on part-time income or even unemployed and staying on benefits. Many lending firms that perform traditional norms may not favour them. They always doubt their capacity to repay.
In such specific scenarios, guarantor loans in the UK from direct lenders come into the limelight. These loans are available on the side income as well because you have the guarantor to back you. You do not have to worry about the loan repayment because your guarantor can repay on your behalf. At the same time, the lender also feels comfortable in approving your loan application.
Yes, the most important point of our discussion has now started (remember, the above is also important). Your loan eligibility largely relies on your past credit performance and overall credit score. Almost every lender would like to offer loans to those individuals who have good credit ratings.
Again, not everyone has the luck of a good credit score. In fact, the number of individuals with bad credit scores is higher than those with excellent or good scores. Due to their lack of financial trustworthiness, they usually fail to convince the lender of their loan application.
If you have a poor credit score but a guarantor is there to assist you, your job has been done now. Now, the lender thinks that loan repayment will be there either from you or your guarantor.
Will adding the guarantor increase my loan eligibility? I think you have got the answer to your question by reading this blog. A guarantor is beneficial in any circumstances. The lack of full-time income, collateral and a good credit score will not affect your loan eligibility as you have a guarantor to support you.
In a nutshell, I would like to familiarise you with another reality. Many people struggle to arrange a person to take your guarantee. It has been found that not every home-owner has a good credit score, and lenders demand both these qualities from loan applicants.
During these situations, you can opt for no guarantor loans in the UK from direct lenders, specifically. These will be very short-term loans, or most of the features match with payday loans. Still, if you have a guarantor, you can strongly qualify for a loan.
Jennifer Powell embraced finance writing just the moment she started working as a finance executive with EasyCheapLoan, which is a direct lender in the industry. Jennifer has an exceptionally keen eye for details and used her skills to pen down numerous blogs and articles on finance. When asked, she simply replies with a look on her face that shows how genuinely she cares for people struggling with financial problems. Jennifer works dedicatedly as a finance professional and considers sharing both her experiences and knowledge to increase the financial literacy of people and businesses.