In today’s economically-challenging environment, many lending institutions are tightening up their requirements for people taking out loans of all types, including guarantor loans. Guarantor loans, or loans that require a co-signer, are most often taken out by those who have little or no credit, or simply a low credit score. If you are in the market for a guarantor loan, how do you start the process? What can you do to increase the odds that the lender you end up with will be the right one for you? Fortunately, these questions are easily answered, because today more than ever, there are numerous lending institutions who specialize in certain types of loans, including guarantor loans.
Image by GotCredit
Therefore, the best recommendation is to research these companies and keep the following tips in mind.
Six Steps to Taking Out a Guarantor Loan
Before you make a final decision on which guarantor loan company to choose, below are the six steps you should start with.
- Get a copy of your credit report. Receiving your entire credit report, as well as your credit score, will prepare you for the rest of the process. Furthermore, it is best to get this report from all three credit reporting agencies.
- Try getting a personal loan first. Since personal loans are often cheaper than guarantor loans, it is recommended that you start with this option. If this doesn’t work, you can proceed with your plans to obtain a guarantor loan.
- Determine the exact amount you need. Don’t ask for more than you need, but know the exact amount before going to a lender.
- Determine if your co-signer is a homeowner. Many lenders require that the guarantor is a homeowner, but if they don’t, it is still recommended that you choose one with this qualification.
- Research the different lenders. This can be as easy as going on the Internet, since there are many websites that allow you to compare various lenders once you enter some basic information.
- Get quotes from different lenders. After you have chosen at least three lenders, get loan quotes from all of them, in order to compare them and determine which one will work best for you.
Remember, it costs you nothing to research lenders online or to obtain quotes from them, so take your time and make sure you get at least three quotes from different lenders, which is the only way to ascertain which company is the right one for you.
Some Final Thoughts
As with anything else in life, choosing a lending institution for your guarantor loan is much simpler if you research what to expect ahead of time. Getting information on the pros and cons of guarantor loans, as well as current interest rates and information on other types of loans, is an excellent way to start. Guarantor loans are not necessarily complicated, but like other loans, they do have specific requirements and legal considerations, and some of these requirements change with each lender. Doing your homework, and being prepared ahead of time will help you starting with your very first visit to the lender.