It is easy to see why someone looking to borrow money would appreciate the options provided by a guarantor loan. When you borrow money with a guarantor loan, you should find that the APR is much more affordable and that you have an increased array of options at your disposal. These are hugely important aspects for a borrower, and they are key reasons as to why a guarantor loan is a great choice.

However, the person who is acting as the guarantor should have a think about their role and the responsibility they are taking on. It is important to be aware that acting as a guarantor is a big responsibility, and it is not something to take lightly. If the borrower fails to make their payments, the guarantor is the person who has to comply with the loan. This is great for the loan company, but it is clear that the guarantor may find themselves at an increased level of risk. This is why people who are willing to act as a guarantor, or who have been asked if they would act as a guarantor, need to think seriously acting as a guarantor for a loan.

Can you afford to make the payments?

You should ask yourself if you are able to afford the repayments if you have to. Hopefully you will not be placed in this position but if you are willing to act as a guarantor, you need to make sure that you are able to make these payments if required. This is why weighing up the likelihood of the borrower making or missing their payments is vital.

You should find that acting as a guarantor will have no negative impact on your credit rating and if the payments are made on time and in full, you can actually improve your credit rating. However, if the agreement goes into default and not paid, you may find that a CCJ is recorded against you. This is another reason why you need to be confident about the loan being repaid because if it isn’t repaid in the long term, you will find that a guarantor loan can work against you.

You need to be committed to the agreement

You should also be aware that once you sign up to act as a guarantor, you can only sign off from your obligation by paying off the loan. This means that you should be prepared to keep your commitment, which means that you have to be fully committed to the agreement before you sign up for it.

Acting as a guarantor can provide a friend or someone you know with great support, and your gesture will be highly appreciated. However, it is not a gesture to take lightly, so think seriously about whether you can act as a guarantor.