We are an Introducer Appointed Representative of Quint Group Limited, who are a credit broker not a lender. Mula Introduces customers to Monevo Ltd who are an Appointed Representative of Quint Group Ltd. for the purposes of obtaining a loan. We do not provide any loan or consumer credit products directly.
Securing a loan can be tricky for some people especially those with a bad credit history or no credit history at all. One way to improve your chances of successfully borrowing money if you have such issues is to opt for a guarantor loan. These typically range in length from 1 to 7 years, and customers can usually borrow sums of up to £10,000*.
Although these loans may seem like the 'new kid on the block' in the money market, this is not the case. Before the concept of credit scoring, many banks depended on the use of guarantors to help eliminate risk in their lending processes. Guarantor loans are unsecured loans which involve a third party (the guarantor) as well as the borrower. By borrowing in this way, you are often able to borrow more money than you would be able to when opting for a more traditional loan. As these loans are unsecured, there is no requirement that you are a home owner in order to apply.
Anyone who is not linked to you financially can act as a guarantor. A spouse for example, may not be a suitable guarantor as they're likely financially linked to you if you have a joint mortgage or bank account, or share bills. A relative or a friend may however be a good option provided they meet the acceptance criteria. A guarantor should typically be a home owner over 18 years of age with a good credit history. The lender will perform a credit check on your proposed guarantor so it's important that they have essential documents such as proof of ID and bank statements to hand. Becoming a guarantor is not something that somebody should enter into lightly - by guaranteeing a loan your relative/friend is agreeing to pay the remaining debt if you are unable to keep up with payments. This can lead to a strain on personal relationships and serious financial issues for the guarantor. Although there are benefits to this type of borrowing, there are also significant risks in acting as a guarantor so make sure you consider all possibilities before applying.
No, you will rarely find a lender who offers a guarantee that they'll lend money to you. By nominating someone to act as guarantor for your loan however, you're potentially increasing your chances of being able to borrow.
Before taking out a guarantor loan ask yourself – is this loan essential? If you are seeking a loan for a more luxury expense, for example a five star holiday – an alternative option would be to save the money in advance. If you feel that the loan is essential, for example a loan for a car to transport you to a new job, then a guarantor option may be an appropriate choice. Once you have decided that you wish to apply for a guarantor loan think about what your requirements are. There are a number of different options available with different repayment periods and different interest rates. Before jumping into signing up for the first loan you are offered think seriously about the amount of money you wish to borrow and how long you will need to pay this money back. When you apply using Mula.co.uk, Monevo will try to match you with a suitable lender to offer you the best loan for your circumstances.
It is important when considering a guarantor loan that you think about how you will meet your repayments. Take the time to review your monthly budget to see what you can realistically afford. Consider all of your monthly outgoings for example utilities, previous credit commitments and regular expenses to determine what you can afford to repay each month. By reviewing your current expenditure you may be able to identify areas where you could potentially make savings and as a consequence choose to loan a smaller sum.
Rates of interest for guarantor loans can be in excess of 50%. The interest rates often reflect the level of risk undertaken by the lender in offering the loan. Remember to check the terms and conditions stipulated before signing any documentation. Although it can be a tedious task to read through the fine print, an omission at this stage could result in you paying extra charges and fines at a later point in time. If there are any terms which you are unsure of, make sure that you speak to your lender for further clarification before you sign.
Other alternatives to guarantor loans include pay day loans, bank overdrafts and credit cards. Payday loans are suitable if you wish to borrow a smaller amount of money over a shorter period of time. The typical lending period for a pay day loan is approximately 30 days. These are great option if you need money quickly for an unexpected expense for example a call out to an emergency plumber. These loans are intended to be repaid quickly and can incur high rates of interest and steep late repayment charges. If you intend to borrow a larger sum of money over a longer period of time then they are not a suitable option. An authorised overdraft facility may allow you to borrow a larger sum of money. This may be a suitable alternative if you can secure an interest free or low interest overdraft facility. If you have a higher rate of interest or if there is a risk that you will exceed your overdraft limit then you may wish to look at other means of finance. If you have a good credit score then an interest free credit card may be a suitable choice. Please remember that you must clear your balance in full before the interest free period ends, otherwise you will need to pay the remaining balance off with interest on top. If your score is poor, you have a history of defaults or have previously declared bankruptcy then this may not be an accessible option for you.
In summary, guarantor loans can be a great option for those with a poor credit history looking to borrow a larger sum. The system allows you to borrow a bigger amounts over a longer period of time then alternative options. It is important to bear in mind that failure to make repayments could result in serious consequences. If you are struggling financially consider contacting The Money Advice Service (https://www.moneyadviceservice.org.uk).