There are a specific set of factors that lenders take into consideration before approving someone for a guarantor loan. If you are planning on applying for this type of loan, you should be aware of these things. While these loans are fairly easy to get, you will still need to be prepared. When you take the time to learn about what it takes to get approved, you will instantly increase your chances.
How Easy is to get a Guarantor Loan?
These days it is actually pretty easy to get a guarantor loan, but not everyone is approved. You need to remember that approval is never guaranteed. Any legitimate lender will not make this promise to anyone before they even submit an application.
The more qualified your guarantor is, the better your chances will be of getting the loan you need. This is why it is so important that you learn about the criteria for qualifying. When you understand what it takes to be approved, you will have a much easier time getting what you need.
Your Personal Debt
The amount of outstanding debt you have is just one thing that a lender will consider when deciding to approve or reject your loan application. The less debt you are carrying, the better your chances will be of getting the money. It is important that you find this out before submitting your application.
The lender will also consider your debt-to-income ratio, which is how much debt you are carrying versus how much money you make. A high debt-to-income ratio won’t instantly prevent you from getting a loan, especially if you find a qualified guarantor. This is still something that you want to keep in mind though.
A solid job history is also something that a lender will look for, both in the primary borrower and the guarantor. If you have had the same job for a while, your chances of being approved are fairly good. Those who have had lots of jobs over a short span of time are less likely to get this type of loan. The guarantor also needs to have a stable history of employment.
While your credit score might not be a big deal when applying for a guarantor loan, the co-signer’s rating is. The person you choose to be your guarantor should have a solid score and credit history. This is one of the more important things that they will look for. You should have this person check their own credit before you have them apply.
If you are going to apply for a guarantor loan as an entrepreneur, you will definitely need to provide the lender with proof of your business’s revenue. They will need to know how much you make before deciding whether or not to approve your application.
Income from Job
Even those who have a guarantor to sign onto their loan will still need to provide the lender with proof of their income. This is how much money you make from your job each month. It is going to be one of the deciding factors when it comes to whether or not you’ll be approved. If you make enough money to pay back your loan on time, there’s a good chance you will get it. Keep in mind that the lender will look for proof of income.
Your payment history will have an impact on your ability to get approved for a loan as well. If your credit history shows that you have missed lots of payments, it could work against you. Each missed payment counts against your credit. This is why it is so important that you make a point of paying all your bills on time. The lender is also going to take a close look at your guarantor’s recent payment history.
History of Housing
One thing that a lot of people don’t know when applying for a loan is that their housing history does matter. Lenders are always looking for how stable an applicant is, and this is just one indication. If you have lived at the same address for a while, your chances of getting approved could be a bit better.
When you are filling out your guarantor loan application, you need to make a point of being completely honest. Even one small lie can completely sink your chances of getting the loan. You also want to go over the application a second time to confirm that everything is properly filled out and accurate. This will ultimately increase your chances of getting approval from the lender. A guarantor loan can be an excellent way to get the money you need despite having a low credit rating, but you need to satisfy other requirements.