Guarantor loans are new to the UK, but the concept has been around for a long time in the United States originating as student guarantor loans. Today this subprime financial solution has become a popular option, although there are few operating lenders in the UK at this time. A guarantor loan is an unsecured personal loan that has been designed to target those that either have a poor credit history or perhaps a non-existent credit history. Guarantor loans are unique in the manner that the credit check does not determine whether you receive the loan; you will be given the green light by a simple backing from what’s called a guarantor. This guarantor could perhaps be a family member, a friend, or even a work colleague that legally agrees to stand in and pay any such missed payment (default) from your agreed loan.

Rather than being judged by a computer that as we know likes to say no, the applicant will be judged by someone who personal knows them well; if this person (the potential guarantor) has trust in the applicant and has a good credit rating then the loan is more than likely to go ahead! This allows people to be given a second chance, which is unique, and the only difference to a traditional unsecured loan after this would be the increased interest rate. Guarantor loans are becoming more popular today in the UK, although you will find that there is at this time only a small handful of guarantor loan lenders operating across the UK market. This niche is certainly growing quickly though and the demand for these poor credit loans is rising all of the time.

A guarantor loan is not a quick-fix solution to escape financial troubles. If you are serious about taking a guarantor loan out then you have to a fully responsible and make sure that every single payment is made when it should be. If you do miss a payment then after a warning this payment will be taken from the bank account of your guarantor and this is the last thing that you would want to happen. If you do make every payment on time then your guarantor will never have to hear from the lender at all; to aid control simply spread the payments out over a number of years so that you have a small manageable amount being paid out! Guarantor loans can help you rebuild your credit profile from scratch and since there is no reliance on the credit check – this has to be an option worth taking into serious consideration.

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