The guarantor loans industry is booming
Over the last two years, the guarantor loan sector has grown exponentially. in 2017, this type of lending was thought to be worth approximately £400 million, and by 2019 just one guarantor loan company alone, Amigo Loans has been floated for around £1.3 billion in total.
How many guarantor loans companies are there?
In terms of official guarantor lenders across the country, there are approximately 12 in total. So whilst it appears to be relatively small with few competitors, it shouldn’t be underestimated: the guarantor loan industry is one of the most rapidly growing in the sub-prime market.
Who are the biggest guarantor loan companies?
As previously mentioned briefly, the biggest by far is the very first lender that started the guarantor loan industry back in 2005, Amigo Loans.
Other leading reputable guarantor loan providers in the industry include TrustTwo, George Banco, and Buddy Guarantor Loans.
How does a guarantor loan work?
Wondering exactly what a guarantor loan is in the first place? A guarantor loan involves the main borrower finding someone (such as a close friend or family member) to be their guarantor for a loan, which means that they are legally obliged to make repayments on your behalf – if you are unable to do so. Typically, customers have the potential to borrow up to £15,000 in total, and this can be spread out over an extended period of time. This can be anywhere from 12 to 60 months in total, and this is repaid in monthly instalments of equal value.
Who can be a guarantor?
The exact criteria of each guarantor loan provider will vary to some degree, but the typical eligibility criteria is as follows:
- The person is aged over 25
- They have ideally a good credit score
- Homeowner status preferred to use as collateral against the loan
- Must be employed
- Regular stable income needed
- The person is a UK based resident
Can you apply for a guarantor loan with bad credit?
Yes, a number of borrowers who have a bad credit history apply for a guarantor loan, due to this very reason.
This is down to the fact that your guarantor essentially secures the loan on your behalf – based on their good credit score history, as they put the lender at less risk when it comes to accepting you for a loan, since they have signed a contract to say they will make payments on your behalf if you cannot – and this contract is legally binding.
For you as a borrower, a guarantor loan can even improve your credit score. Providing that you only take out a loan that you know you can pay back, and you make these payments on a regular basis each month, you can improve your score over time.
How soon can I receive guarantor loan funds?
If you apply for this type of lending and your guarantor loan application is approved, you can expect to receive your loan within 24 to 48 hours. When the loan is approved, many lenders will typically decide to put the funds into the guarantor’s bank account first of all, as a means of providing a security check.
If this has taken place, the guarantor is then able to pass the funds to the borrower.