Are Guarantor Loans a Good Idea?

Are Guarantor Loans a Good Idea?

If you have perfect, prime credit and are looking for finance then an unsecured personal loan is the best option for you. However, not everyone can claim to have built up such a good credit record and for them getting credit can be difficult.

This is where Guarantor Loans can help:

  1. If you are young and haven't had the chance to build up a good credit score, taking a Guarantor Loan is easier and by making the repayments you can show you are a trustworthy borrower, thus increasing your credit score
  2. If you have gone through some tough times that have affected your credit score but now you are back in control of your finances again but need a "second chance" with credit, a Guarantor Loan will give you this opportunity.

Some people will say that a Guarantor loan with its typical APR of 40-50% is too expensive but this should be viewed in context. Though unsecured loans can be taken at rates of 4-6% APR for those with prime credit, for those without perfect credit, the rates for unsecured loans can easily go to as much as 99% APR and even Log Book loans will go up to 200% APR!

It's not always easy to ask someone to be a Guarantor for your loan but if it means the rate available to you comes down from 200% or 99% APR to something like 45% APR, then it is worth having that conversation with a good friend or family member (except a spouse/partner as they are ineligible to be your Guarantor). A Guarantor loan will also allow you repay over as much as 5 years - though you can repay early at any point without serious penalty - and amounts of up to £10,000 are available.

For all these reasons a Guarantor Loan is a good idea for those who need a break with their credit score. At Choice Loans our system will give you quotes from many different providers, allowing you pick the best one.