Useful Information

Depending on the amount of money you are seeking, a guarantor loan can help you over the next year or so to get to where you need to be with a home, a new vehicle, or to pay for a wedding. At Clear Loans we provide guarantor loans between $3,000 and $15,000. It is a big decision to make when looking at whether to apply for a guarantor loan, so what is it that you need to know?

The useful information relating to guarantor loans you find on this page will help you make a fully informed decision.

What is a guarantor loan?

If you have struggled to secure a loan through traditional lending sources, or you do not have enough savings for a deposit when searching for a new home, it could be that you require some extra assistance and reassurances to acquire the finances that will help you out at this time.

A guarantor loan is credit where another individual (the guarantor) uses his or her own property (or equity in a property) as security to guarantee a portion or entirety of a loan on behalf of someone else. What this means is that the guarantor takes the responsibility for the loan in the case of the borrower failing to make repayments. This lowers the risk in the eyes of the lender, and allows for those with bad credit (and other impediments to traditional loan sources) to acquire a loan.

There are several benefits to a guarantor loan for the borrower. You have the ability to ease a financial situation that you cannot get out of through traditional lending sources. If you are seeking to put down a deposit on a property it allows you to get into the property market faster. A guarantor loan is also a great choice to consolidate smaller debts (credit cards etc.) in one easy to manage place. There are, of course, risks attached to a guarantor loan, as there are with any type of credit. As the guarantor is the individual ultimately responsible for the repayment of the loan, always be sure that your relationship with them is as strong as possible, and that you have the means with which to pay back the loan. It is the guarantor who will suffer if you cannot make repayments.

What is the Difference Between Secured and Unsecured Loans?

It is important to understand the difference between a secured loan and an unsecured loan when making any loan application.

A Secured Loan - This type of loan is where the debt in question is linked to the property of the borrower (or guarantor). These types of loans are only available to those borrowers who already own a property, or who are seeking to buy a property with a secured loan. The amount you can borrow, the repayment time and terms will all depend on the personal and financial circumstances of the borrower.

An Unsecured Loan - Unsecured personal loans are available to borrowers who are seeking to borrow anything from $3,000 - $15,000 in most cases. If you do not have a good credit score, and do not own a property that can be used as security against a loan, a guarantor loan could be the answer for you. A guarantor loan is an unsecured loan where a second person is responsible for the debt if the borrower fails to make payment.

Unsecured loans, such as guarantor loans, provide flexibility and availability to those who cannot acquire finance solutions through traditional means.

What is Loan Affordability?

In order to assess whether an application should be accepted an affordability assessment must take place. This will help to establish if the borrower can afford to repay the loan over the agreed terms. A loan affordability assessment will take into consideration your incomings and outgoings, and set these against your loan application and the amount you wish to borrow (including all fees and interest added to the initial loan amount).

An affordability assessment will include:

  • Any proof of income, including your net wage (weekly/monthly), any benefit payments you receive, any other additional income.
  • Information relating to your personal and living expenses - including all mortgage payments/rent, utility bills, food bills, other loans and credit repayments etc.
  • A credit reference check - to see your credit score

During an application the sustainability of the loan will see if all of the above financial circumstances allow for a further loan to be included within those outgoings realistically. You should be able to make repayments on time without it impacting on your other outgoings, you shouldn't have to sell items or borrow further money to make repayments on a loan, and you should be in a position to repay the loan over the agreed timeframe, in full.

It may be the case that further paperwork is required, such as proof of ID, proof of address, and proof of income, so always provide upfront information that is accurate and completely up to date, prior to making an application for a loan.

For some applicants of loans, they may be in a position where the current financial situation is sound and ticks all the boxes, but they have a poor credit history that they are yet to have moved away from. In these cases, a guarantor loan is the perfect option, providing a safety net for the lender, and a way to build positive credit and move forward with your life in a positive fashion, as a borrower.

If you are interested in finding out more information about Clear Loans and how we can help you financing between $3,000 and $15,000 for various purposes with a guarantor, please feel free to contact our friendly team today. To do so, you can either fill out the simple form on our contact page, where we will contact you at a convenient time for you. Alternatively, why not pick up the phone and speak to a Clear Loans representative today? You can call us between 9am and 9pm, Monday to Friday, on 03 8566 7773.

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