When you are looking to secure a loan whether it’s a personal loan, short or long term, whatever it is for, you will most likely need to have a guarantor to back your application.
A guarantor is a person who knows you and will sign for you, allowing you to be approved for the loan. A guarantor is, essentially, saying they ‘vouch’ for you and that if you fail to pay the loan, they will pay instead on your behalf.
A guarantor is placing a great deal of trust in you for accepting the responsibility of your debt should you default on the loan or fall into arrears, so you should choose this person carefully.
So how do you choose a guarantor?
Choosing a guarantor seems like a simple process, but it is important to consider whom you wish to be your guarantor. A guarantor can be family members such as your mother, father, sister, aunt or cousin but can also be a close friend or work colleague who knows you well.
It is important to choose a guarantor who is in good standing and employment as they must have an excellent credit rating and be otherwise not financially linked to you. This does not mean they have to own a home, only that they have guaranteed income and are seen as a secure investment on the part of the loans company.
You cannot choose a random stranger or somebody you met on a night out at the club be your guarantor. If your guarantor is in poor credit, then they cannot be chosen for your application, and your request will be denied.
Besides the initial contact, a guarantor should not hear from the loans company, and instead, you will be the point of contact. The loans company will only contact the guarantor should you default on the loan or if you were to fall into arrears.