Debt Consolidation Loans With a Guarantor

Most of us struggle financially at one point or another, and often we turn to loans to help us in these situations. This can be beneficial and paid back on time and in full, could even improve your credit rating. However, life doesn't always work like that and sometimes debts can become overwhelming. There are options out there to help us pay back what we might owe, even with a poor credit score.

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What is a guarantor loan?

One option if you have very bad credit is a guarantor loan but most direct lenders won’t offer this. A guarantor loan is when you have someone willing to meet your repayments if you’re unable to, much the same as a guarantor for when you’re renting a property.

This can be useful if other lenders are turning you away for a personal loan but can become tricky depending on who you ask to be your guarantor. Always ask someone with who you have a healthy relationship and make sure they understand the full extent of the situation:

  • how much you’re borrowing
  • why you’re taking out a loan
  • how much do you expect to pay back per month?
  • how long do you expect it to take you to pay it back in full?

Not everyone can ask someone to be their guarantor. Often it needs to be a homeowner who has a comfortable income and proof of that; sometimes it can be challenging to find someone in that situation that we know well, who is also willing to do it. They’ll also always perform a credit check, so the person you’re asking will need a good credit history.

Finder reported that the number of people concerned about guarantor loans has risen over the past 7 years, rising from 635 to 22,281. This could mean guarantor loans appear to be less successful in recent years. It might be better to consider loans without a guarantor.

What is a no-guarantor loan?

This is the type of loan you’re probably most acquainted with, most people would call this a regular personal loan. It can come in many forms, including payday loans or quick loans, store cards, and more. However, one thing to note is that they will often have a very high-interest rate, especially on short-term loans; and you may not be eligible if you have a poor credit history.

What are your options?

Realistically, if you’re looking for a no guarantor loan but have very bad credit, most direct lenders won’t consider you. This is because they don’t have any backup if you can’t afford to make payments. However, there are always still options open to you.

One of your options for bad credit is a debt consolidation loan. This is a type of loan that you’d be looking at if your poor credit rating is due to already existing debts. A debt consolidation loan enables you to borrow enough money to pay off what you owe and turn your payments into one affordable monthly repayment.

All DCLs provided by accredited companies, like ours, are regulated by the financial conduct authority (FCA). According to the FCA's guidelines, we uphold the values of never creating unfair contracts or misleading promotions. It's in our interest to provide you with a loan that will ultimately help you to pay back what you owe and put on you on a better financial journey.

Choosing what company to borrow money from can be confusing as the market is saturated. But we prove ourselves with high quality, honest and judgment-free customer service.

Guarantor vs No-Guarantor Loans

Guarantor

  • May enable you to borrow even if you have very bad credit
  • Less worry on yourself if you can’t make payments
  • Could risk your relationship with your guarantor
  • Only possible if you know someone eligible to be your guarantor

No Guarantor

  • Harder to borrow if you have a poor credit rating
  • All responsibility lays on your shoulders
  • More options for no guarantor loans available on the market
  • Don’t have to rely on someone else to borrow