“The more we assure, the more secure we are”, thus guarantors were thought to be essential in the early days of financing. They assure the payment when the borrower fails to do the same.
Generally, these guarantees are good credit holders but are aligned with the borrowers, who own a poor credit history. Thus, in customary cases, the co-signers work as the essential requisite when one has to get the approval of any sort of loan.
However, in the UK, it is possible to get no guarantor loans and the borrowers usually apply it, when they are incapable of owning a human guarantee to pay back the amount in case of any default. Lenders offer these loans at a higher rate of interests as compared to the personal loans that require a person to co-sign the agreement.
Why such loan is in the requirement? –
- In the absence of guarantor – Finding a person to act as a secondary borrower is not everybody’s cup of tea, the borrower may not get the person of a good credit or may face an issue in convincing relatives or friends of their choice to pay back the borrowed amount in case of any default on their part. Thus, these funding sources contribute a lot to avoid any such deploy on the borrower’s side.
- In the case of emergency – Emergency never intimates proactively, thus when in need of any urgency like that of car repair, medical need, or any bill payment, a borrower prefers to take a loan with no such obligation and to avoid the lengthy and time taking process.
- Hassle free – Applying for a loan signed by the guarantor is duly appreciated, but it needs lots of formalities to be undertaken on the part of borrowers. However, these loans do not require any formality as such.