Loans can be acquired in different ways. People have different means to get to that extra cash when they need it for emergencies and unexpected events. However, most people turn to banks, as they present the institutions which deal with this activity constantly. It presents a part of their daily routine – to loan the money out and wait for the return, with a certain fee included, as a reward for the services they provide. Banks and other forms of financial institutions offer different types of loans. The variety of products will certainly satisfy even the most demanding of clients.
Types of loans
However, one type of loans is specific, and it has several characteristics which make it stand out from the rest, and whose features appeal to millions of people from all over the world. This type of loans is called guarantor loans. In some form or the other, it is present almost everywhere on the globe, at least in those areas where the banks are operating. People are attracted to this method of acquiring money because it is efficient, fast and productive, which means that they can get their hands on the cash with little paperwork and in a short period, which is something most people need.
Guarantor loans are in general requiring only three parties to be completed: the bank, the applicant for the loan and the guarantor. The bank issues the funds, i.e. they do it if the applicant and the guarantor successful fulfill all of the necessary criteria. The applicant is the one who files the request for the loan, stating the desired amount and providing the required personal information. The role of the guarantor in this whole process is to co-sign the agreement and to be a guarantee that the applicant will fulfill his obligations properly and that the funds will be re-payed within the agreed deadline, usually through regular monthly installments.
Loan without a strong guarantee
Guarantor serves as a “backer” in the process of application. His role is important since the applicant usually would not be able to get the loan without a strong guarantee. This type of loans is therefore useful to people who have low credit rating and poor credit history, usually for not being able to payout the previous loan. In case the applicant is not able to payout the whole amount again, the guarantor will have to take his place and pay the remaining amount. Guarantor’s role in the whole method can be very tricky and risky, which is why this type of loans is generally agreed among family members and friends, i.e. between people who have already developed a certain level of trust and understanding.
The banks are usually offering these loans on a period from one to five years, although this varies from one institution to another. Also, slightly lower interest rates are applied to these loans, which makes them affordable and a good option for those customers who need an urgent boost in the financial department but cannot apply to other kinds of credit arrangements.