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Sometimes bad credit scores can get in the way of getting approved for a personal loan. Fortunately, there are several ways you can do that can help you get approved for a loan despite your scores. One of the foolproof ways you can try doing this is by getting a guarantor. If you’re new to the word, let this article break down to you what a guarantor is.
What is a Guarantor Loan?
When you don’t qualify for a loan, especially if due to bad credit scores, the tendency is borrowers would instead apply for a guarantor loan. How this works is that you get a person who can guarantee that you would pay for the loan by agreeing to pay the amount of the loan in the event that you, the borrower, fail to make the necessary payments.
Who is a Cosigner for a Loan?
The criteria for guarantors typically depends on the financial institution or lender but here are the general qualifications for a guarantor.
Must have good credit. The most essential the universal criteria is that someone who will guarantee to pay for your loan must have a good credit score as this proves his or her creditworthiness. In essence, a good credit score tells the lender that the guarantor can cover for the loan.
Has a stable and steady source of income. Financial institutions and lenders like banks check any borrower’s source of income as this tells them if the individual can pay for the loan. Your guarantor must be able to show proof of income as this also stands as a proof that he or she can pay for your loan.
Owns a home. This one is a case to case basis but typically, those who owns a home can get better access to guarantor loans with better conditions as opposed to non-homeowners.
There are numerous lenders and financial institutions that do offer payday loans. When you do have an amazing credit score, you’ll find that your chances are automatically increased. But despite an excellent credit score, a guaranteed payday loan does not really exist. In fact, any guaranteed loan does not exist.
Where to take out a payday loan where approval is almost guaranteed?
There are certainly some financial lenders who promote their payday loans as guaranteed so you have to be wary of them as these lenders can usually get you trapped in an endless cycle of payday loans with high interest rates.
What is a Guaranteed Payday Loan?
The word guarantee does not and never really does mean that your application is going to be approved with a hundred percent certainty. What it does mean is that they are more lenient when it comes to their requirements. Usually, they’re more interested in proof that shows that you can repay the loan, instead of just credit scores. If you have a stable and good source of income, then chances are you’ll get approved. Just remember that payday loans, even guaranteed ones, come with sky high interest rates.
What Factors to Consider Before Applying?
Loan rate - The first thing you have to consider is the amount of the loan. Make sure it doesn’t go way beyond the amount you need. You’re going to be paying interest costs so it’s best if you keep the loan at a minimum.
Time period of loan - Consider the period that will be offered to you. Payday loans are usually expected to be paid by your next paycheck.
Compare and contrast rates - Different borrowers offer different amounts and different terms or conditions. Always do a thorough check of all your options before applying. Some lenders take advantage of people with bad credit while others like credit unions are more lenient.
Traditionally, it takes three days or even almost a month to get a loan from banks and conventional loan providers, and this depends on the type of loan and the loan amount. The application process is lengthy and sometimes, it will ask you for a few trips back to the lending establishments. On top of this, you might endure long lines, carrying a handful of requirements, and talking to several lenders before you take your money home.
The Five Major Steps To Get A Cosigner Loan
Step 1: Find A Lender
Before you take a loan, you need to know who will provide you a loan. This includes shopping and comparing at least three lenders and their rates, policies, and repayment terms. You also need to check reviews from their previous clients and contact the lender via email, phone, or by visiting their shop personally.
Step 2: Decide On Your Loan Amount
Determine your purpose for borrowing the loan and the amount you can afford. Make sure that your monthly income is enough to cover the loans; meaning, you have enough budget for your regular bills and other expenses and extra cash to repay your debt.
Step 3: Pre-Qualify For The Loan
In this step, you will provide basic information about yourself such as your employment details, residency, and asset. The lender will also check your credit report to know if your eligibility and you will receive a pre-qualification letter afterward.
Step 4: Loan Application
Prior to this, you will receive an offer which you need to sign and once the lender accepts it, you can start the actual application on their office or online. You will be provided with a loan contract and once you agreed, you’re on your way to the final step
Step 5: Getting Your Funds
Once approved, the funds will be provided to you by the lenders personally or you can ask them to send it over your bank account.
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