Banks and other financial institutions offer various ways in which their clients can loan money. Clients use it as an immediate fix for some emergency or some larger project. Of course, later return the money by monthly installments dispersed over a longer period of time. Loans and credits are perhaps primary functions of banks, and banks provide different arrangements in order to satisfy all demands and to fulfill every possible need that their clients may have. Of course, banks are not doing this for free. They charge their services and asks a certain fee for almost every action they take. However, people usually do not have much choice and they have to take the loan under any circumstance. This is the position which banks exploit the most.
What it means guarantor loan?
One type of arrangements which they offer is particularly favorable to people who already had loans and credits but they failed to return the money in the appropriate manner. Those people are usually assigned with a label that says they have poor credit history. This low rating makes it impossible for them to apply and receive larger amounts or more affordable loans. However, the type of loans which they can get is called guarantor loan. This method is used all over the world and it attracts millions of people because of its simple and efficient nature. In this video you can find useful information about guarantor loan.
The role of the guarantor
Guarantor loans are based on the idea that the applicant has to have a person who will serve as a guarantee on his behalf, and who will potentially be able to “take over” the loan if the applicant is not able to provide regular payments. As we can see, the role of the guarantor is very important. Even though in reality most cases end without any actual interference from the person listed as a guarantor. Majority of loans are payed out by the applicant. But also cases where the guarantor has to pay the whole amount are present from time to time. Different reasons may prevent the person to payout his loan. But it is advisable to carefully select the person you will guarantee for. Since scams and malicious intentions are always possible.
The person who serves as a guarantor in this type of arrangement usually has to be a home-owner, and this is the only requirement with most banks. Guarantor loans are given on period of one to five years, and banks naturally charge interest rates for longer periods. Admittedly, interest rates are lower than in other types of loans, and banks generally do not charge arrangement fees when it comes to this kind of deals.
However, everything depends on a bank and its customer policy, so things may be different in your local financial institution of this type. Also, guarantor loans can be issued to persons who are not in full-time employment. This makes them perfect for students and part-timers, who are usually impeded from applying to other types of loans. Guarantor loans are affordable and flexible, which is perhaps the reason why they are so popular all over the world.