It is easy to worry that certain types of loans will not
give us the amount of money that we need. When we are looking to borrow money,
it is usually because we need to buy a specific item. This might be because we
have an emergency that we cannot pay for, perhaps an unexpected bill, need to
replace a broken white good or something like that. There are all sorts of
possibilities but if we need a lot of money then we might worry that we will
just not have enough for what we need. A guarantor loan is a relatively new
type of loan and this means that many people may not have an idea of what they
are like. It might be that they are worried that they might not be able to
borrow enough money. However, due to the way the loan works, it is likely that
you will be able to have enough.
How a guarantor loan works
So a guarantor loan is different to other loans in that you will be able to borrow a significant sum of money even if you have a poor credit record. This is something which we are probably not used to seeing and therefore may come as a surprise. However, there is a good reason as to why they are happy to lend more. This is because they will need a guarantor. The guarantor can be anyone that has a good credit record hat is prepared to cover any repayments that are missed by the borrower. This will be someone that they know well, usually a family member but sometimes a friend. The lender will check that the guarantor has a good credit record and if they do, they will lend the borrower the money that they want and be confident that it will be repaid, even if it means that the guarantor repays it. The loan is repaid in instalments to make it easier to manage the repayments. How long the loan lasts and how much is repaid will depend on how much is borrowed and the terms and conditions of the specific lender.
How much can you borrow?
The amount that you can borrow will depend on the lender that you choose to use. It is common to lend up to £10,000 but you may be able to borrow more or less depending on the lender that you choose. You will have to repay this over a series of years and the longer you take to repay, the more interest you will have to pay on the loan. You should be able to calculate how much the total cost of the loan will be so that you can decide whether they are right for you. If you are not sure how to do this then get in touch with the lender and they should be able to help you. If they cannot then it would be wise to contact a different lender as this is something which is basic to calculate and they should be able to do.
Will it be enough?
Whether this amount will be enough money will depend on how much you need. It is wise though, to make sure that you are borrowing the minimum amount. It can always be tempting to borrow more money than we need and therefore end up paying more than necessary in interest. Therefore, make sure that you take account of savings that you have and any other money you can use before you add up what you need to borrow. Also only borrow for the item that you need, try not to be tempted to borrow a bit extra. It can often be tempting to get some more, either just in case you need it or to treat yourself to something. As much as you might deserve a treat, you do not deserve to pay the additional interest you will have to pay if you borrow the extra money.
Therefore, unless you need to borrow tens of thousands, you
should find that there will be guarantor loans that will have the money that
you need. However, you will only be able to use them if you can find a suitable
guarantor and so this could be a condition that you may or may not be able to fulfil.
It will depend on whether you know anyone with a good credit record and enough
money to make the repayments who is also interested in helping you out. Do make
sure that you are aware of the cost of the loan so that you can decide whether
you really want it. It is equally important to make sure that you can afford
the repayments. Although you do have a guarantor to help out, you might want to
make sure that you can pay as they may not take kindly to having to help you
out with every single repayment.