A guarantor can be anyone from a family member to a friend or a colleague, who promises to be held responsible for the loan that the borrower is taking. This a third person that helps someone avail of a loan from a bank for whatever reason the person may have. While guarantor loans in UK is by far the easiest and cheapest of loans to avail of, when it comes with a lot of drawbacks for those who are going to be the guarantors.
However, apart from worsening the credit score even more upon defaulting or being unable to pay back the loan, the borrower isn’t under much risk at all. All the responsibility lies with the guarantor. So here’s what you need to know about the dangers of being a guarantor.
The dangers of being a guarantor:
- You may have to repay the loan if the borrower fails to do so, as you have signed papers as a guarantor for the borrower. This means that you will be responsible for paying back a loan you did not need or take or use, but the borrower did. And there are very few, if any, ways to get out of such a soup.
- Being a guarantor for guarantor loan means that you will not be able to take a loan for something that you may need at the same time and will be required to wait till the loan that you are guarantor for, is paid in full. No bank will give you a loan because you will not be able to afford it. This is because a certain amount of your income will be allotted for the loan of your friend or family member in case things go south.
- Over time you never know how relationship with the person may change. Even though you may fall out with the person, you will still be tied to the loan and you will be unable to get out of it. You will still be held to the same contract and will have to pay off the loan even if still aren’t in contact with the person. Even good relationships may get damaged if the borrower fails to pay the loan or if the guarantor is unable to do so.
- The other person defaulting will also look bad on your credit file, especially if you are unable to pay back and this will affect all and every future loan that you may think of taking. Your assets, property and also credit score will be at risk, until the entire loan amount is paid off by the borrower.
How can we help?
We know at www.guarantorlender.com help you to find out more regarding this loan. We can assist you; figure out how much of loan can be availed of with your assets. We help you to calculate the amount of guarantor loans in UK that you are able to acquire. With our loan calculator and extensive network of lenders, you will certainly find the best loan settlements.