One of the best ways to assist your small and immediate financial needs is by getting a guarantor loan. Guarantor loans are a contemporary form of loans that involve a middle man in the process. The middle man or the guarantor is the person who willingly takes the responsibility of paying your lender the loan amount in case you fail to pay.
However, just like all the other types of loans, guarantor loans are also a subject of rejection in case certain requirements are not met by either the guarantor or the borrower of the money.
Following are some of the most commonly found reasons linked to the rejection of a guarantor loan.
Bad Credit Rating
Although guarantor loans don’t usually take the financial condition of the borrower into account, there is a possibility that if you have a very bad credit rating due to history of bankruptcy, your application might be rejected. On the other hand, the credit rating of the guarantor matters a lot. Since a guarantor is held responsible for paying back on your default, lenders make sure it is someone who has a very good credit rating before loaning the amount.
Another thing that could potentially lead to a rejected application is not a having a credit history at all – especially for the guarantor. The lenders will be unsure if their loaned amount will be returned, let alone the interest applied on it.
Excess of Loan
If you already have a mountain of loan over your head, you are likely to be rejected for a guarantor loan, regardless of how good the history of your guarantor may be.
Both the borrower and the guarantor are required to earn a minimum of 400 pounds a month whether it is earned by being employed, or self employed. Furthermore, both of you must also make sure to provide a sufficient proof of income to the lenders. Without proof, it is almost impossible to get this loan.
Rejected Applications from Other Institutions
It is difficult to get a guarantor loan granted in case your credit history shows several previously rejected applications. Such applications raise doubts about your ability to return the loaned amount. Therefore, a good way to get around this issue is to always prepare your application and lessen as much negative points on it as you possibly can before applying, while opting for a guarantor who has an excellent credit history.
Failure to fulfil the general requirements for the application can lead to a rejection of your guarantor loan application. Some of the general requirements for a guarantor loan application include the following:
- Applicant and guarantor must be residents of the United Kingdom.
- Both should have a bank account in the UK.
- Both of them should be over the age of eighteen.
- Both must be free from any financial links with each other.
It is not necessary that the reasons mentioned above will definitely lead to a rejected application. There are certain guarantee loan providers who believe that every person should be given a chance to prove their improved financial abilities and they may be able to help you out.…