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Advantages and Disadvantages of Guarantor Loans

Guarantors are third parties who are linked to loans by guarantees. They are meant to provide additional security to the lenders. They have a responsibility of ensuring that the loan is repaid in full. Ideally, a guarantor should be prepared to repay the loan if the borrower is unable to service it in full.

Being a guarantor for an individual is one of the critical decisions and responsibility that can be taken by anyone. However, this is a sensitive task that is mainly reserved for close friends, family members like parents, and work colleagues. Any person who is planning to use the services of these people should be capable of servicing his or her loan on his income. You can understand the pros and cons associated with guarantor loans by going through this post.

Advantages

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Improving the Borrower’s Credit Rating

Managing the credit well is one f the best ways or improving your credit rating. Paying your guarantor loan on time and in full is an effective method or repairing the borrower’s poor credit history. Most lenders are known for offering borrowers the option of repaying their loans early or making overpayments without additional charges. You should take this advantage to reduce the total repayment cost and your loan term. Again, it is another great way of improving your credit rating.

They are good for Those People Who Have Poor Credit History

Anyone who has a poor credit history can use this loan to add security to his or her repayments. This has made them a great option for those guys who have no or little credit history like young adults who are buying their first car or home.

Make your Loan Application Successful

As it was mentioned earlier, guarantors have added security for the lenders. Loan applications that have guarantors stand a high chance of being accepted. In addition to this, the lender will lend you more money when you are backed by a guarantor.

Disadvantages

Just like with the other types of loans, guarantor loans are also associated with certain risks. Anyone who is willing to take this role or responsibility should understand these disadvantages.

You are Required to Be Honest and Open

honesty

Most people do not feel comfortable when disclosing information about their financial situations. Again, some borrowers may not be willing to admit that they have financial problems. Borrowers are required to have an honest and frank discussion when dealing with guarantors. They should be ready to discuss their financial situations for their applications to be approved.

Your credit rating can be affected

Guarantors are asked to service the loans borrowed by the lenders if they don’t make payments on time and regularly. This is something that can affect their credit ratings negatively.…

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Financial Tips: How to Get a Student’s Loan with Ease

Many young people have decided to pursue education as their sole business in their youth age. Education is not cheap. It is an investment that requires a lot of cash. Money is used for school fees, upkeep, and books purchasing. For a student to achieve all his endeavors, all these basic amenities are needed. Due to the harsh economic condition, the only way to afford all this is by taking a loan. This is a complete guide on how to get a student’s loan with ease.

Build your credit bureau rating

student loanFor the lending institution, a student is just a customer like any other. The security of the firm is the ability of the client to pay the loan. A bank identifies people they can trust with loan using the credit bureau rating. It is a database maintained by all lending companies and business.

Upon taking a loan from any of this lenders, one is registered in the database. If one has never taken any loan the credit rating is kept at zero. Upon good honoring of the loan agreement, one is rated on the positive side of the scale. The rating will depend on the amount of loan and the duration of payment. If one does not honor his loan obligation, one is given a general negative rating.

Consider the lending institution

The second step is to consider the lending institution that can give you a loan with much ease. Most student loans are payable after a long time; normally after completion of studies. Some companies will charge a high cost for their loan. Be keen on the selecting of the companies.

Government loans board is the best lender. The government has all the detail of the student and therefore the process of applying for the loan will be easy. Loans should be given to people over the age of 18 years. If one is below the age, one should seek intervention from the school for a recommendation letter. Always check on the maturity date of the loan.

Bank account and revenue authority pin

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The final thing is to open a bank account and the revenue collection pin. All institution will require you to produce the taxation pin before you apply for a loan. It is this pin that will help track down the person after the maturity of the loan.

If the loan is not paid, the lending institution can forward the details to the law enforcement agents and other lenders. A bank account is important for both the collection and payment of loans.…

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