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It's the time of year where sons and daughters are suddenly extra nice to their mums. As a thank you for all the past sacrifices and general lovely mum behaviour – they'll buy them some flowers and maybe take them out for dinner. This year, it might be worth going the extra mile on Mother’s Day if you’re in need of some extra cash.
For anyone looking to take out a loan, but struggling to find a lender due to a bad credit rating, mother dearest could hold the key. Your mum or guardian could become a real knight in shining armour and save the day by acting as your loan guarantor.
Not sure about guarantor loans and how exactly mum can help you out? Fear not, the experts at comparison site moneyguru.com have some words of wisdom and advice on how to get on mum's good side.
A guarantor loan can be an unsecured loan that requires the borrower to have another person acting as a guarantor. If for any reason you can’t meet your payments, your guarantor will have to pay off your loan. This reduces the risk for the lender, allowing you to get better interest rates than you would normally have been able to.
This might not be the last time you get asked for a guarantor either. Landlords and mortgage providers often ask for them – so don’t use up all your favours from mum just yet.
Guarantor loans are generally a good option if you’ve exhausted other avenues and aren’t having any joy in your search for a loan. You may have a poor credit rating which is hampering you, but don’t panic, a guarantor loan should allow you to borrow more in this situation.
While we would hope you’ve been nice enough to your mum so she’d say yes, your guarantor can be anyone. Usually a guarantor would be a family member or a good friend, but it can’t be anyone financially linked to you, such as your husband or wife. In most cases they will need to be over 21 and will need to have a good credit score.
Your guarantor will often need to be a homeowner and will have to go through all the same credit checks that you would have to. But don’t worry, if you keep up to date with your payments, your guarantor won’t be involved at all – they’ll only need to step in as a last resort if something goes wrong.
Guarantor loans are like any other loans, the interest you pay will depend on a number of factors. These include the lender you are using, as well as your credit rating. Let the Money Guru help you to compare loans here.
It may be the shoe’s on the other foot and a family member or close friend asks you to be a guarantor. First of all, congratulations, you must be very trustworthy. But be careful, there are several things you need to consider:
- Is the borrower responsible enough to have a loan?
- If the worst comes to the worst, would you be willing and able to pay the loan back?
- Do they really need a loan?
While we might not be able to convince your mum to be your loan guarantor, you can check out wisdom and insights from the Guru himself, here, to help you on your way.