Guest blog: Who makes the best guarantor?14th November 2013

Guarantor loans appear to have made a drive to the fore over the past few years, with both new lenders joining the market and a growing awareness of the product by consumers through various advertising campaigns. Many of the younger generation adults from 18 to 29 may never have heard of these before, but they are in fact a throwback to a method of borrowing that is dozens of years old.

The guarantor loan providers premise is that if there is more than one person who is responsible for the repayments on a loan they have granted, then they are more likely to get their money back, whether it be from the original applicant or the second applicant.

This second applicant is in effect guaranteeing to the lender that they will make the payments if the person they have been guarantor for does not. Of course the inference from this is that the guarantor will also be very keen to encourage the first borrowers to meet their repayment obligations, so that they don't get landed with the bill. This is further reinforced by the fact that for the loan to be granted, the guarantor will have to sign a binding credit agreement with the lender confirming their commitment to the debt.

You might expect that the criteria to become a guarantor would be highly complex and detailed, generated by actuarial experts, however this is most definitely not the case. All lenders vary a little of course, but such is the confidence of the lenders that the model works (and we can only presume they have the historical account performances to back it up) that the high level factors are generally very simple and straightforward.

Typically the person would be a homeowner, with a regular income alongside a decent credit profile and would not already have any joint credit accounts with the first borrower – such as a combined current account. If you are looking for a guarantor to back your loan then ticking these boxes will go a long way. It is also worth bearing in mind that your backer can be a friend a work colleague or even a relative, so in your circles hopefully you will find someone suitable.

To find out more visit www.firstchoicefinance.co.uk/Guarantor-Loans.asp First Choice Finance has access to guarantor loans, homeowner loans and mortgages and provides free no obligation quotations.

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