There are lots of different types of loans and they have advantages and disadvantages. Borrowing in general has pros and cons and specific loans also have their own specific pros and cons as well. It is good to be aware of how different loans work as well as their advantages and disadvantage so that you are able to know whether the loan will be right for you. As there is so much of a choice, it can be tricky to know which to go for but what it does mean is that you are much more likely to be able to find a loan that will suit you because there is such a choice.
What are the Advantages of Guarantor Loans?
- Guarantor loans are a way that some one with a poor credit record can borrow money. This means that if you cannot borrow using more traditional means because those lenders only are interested in people with a good credit record, you will still be able to borrow money.
- The loans will usually allow you to borrow between £1,000 and £10,000 and this means that you will be able to buy something significant with the money. So, if you need a new car, extensive repairs on your home or something like this, then you will be able to use this loan for this sort of thing.
- You will be able to repay the loan in instalments which should allow you to have the time to afford it. Some no credit check loans have to be repaid in a lump sum and this can be tricky to repay with the amount being large and it can also be tricky to manage the rest of your monthly outgoings once you have repaid it. Having instalments should mean that it is much easier to repay the loan.
- You will have a guarantor who will make repayments for you if you cannot manage them. This means that the loan will be repaid even if you get into financial trouble. This can save you from the stress of having to make these repayments when you are in difficulties.
What are the Disadvantages of Guarantor Loans?
- The loans can be expensive because they are designed for those with a poor credit record. This means that you may pay more than you would with a traditional loan. However, if you have a poor credit record then you will not have a massive choice with borrowing and so it could still be a useful option for you to consider.
- The amount that you can borrow is limited, but it is still a useful amount of money and it is unlikely that you would need more. If you need less, then it might be better to use a payday loan which lends up to £1,000 as it is never wise to borrow more than you need because it is expensive.
- Repaying in instalments will mean that the loan will last longer. However, if you borrow a large sum of money then you will need to have time to repay it as it will be too difficult to repay otherwise. There may be the option to repay it early if you want it.
- You will need to find a guarantor. This needs to be a person that will agree to make any loan repayments that you cannot make. They will also need to have a good credit record. Not only will you therefore need to find someone with a good credit record who can afford to make your loan repayments but you will also need to find someone who is willing to help you out like this.