Loans without guarantors are popular but there are still millions who look to guarantor loans. It’s understandable as they look easier to obtain and of course, if you have a friend to in need of help you want to help. However, being a guarantor on a person loan can be a very risky prospect even when you think you know your friend well enough. Here are five risks you really need to know about before being a guarantor.
The Borrower Could Set You Up To Fall
You might be a guarantor to a friend but it might be that your friend never had any intention to repay the money back. Essentially you’re going to be the one to take the fall. Everything bad will happen to you simply because you agreed to take responsibility for the loan if the borrower failed to pay. You were acting as the guarantor to the loan company that the borrower was able to pay back and since they didn’t you have to. That’s why loans without guarantors are so popular as there is none of these risks or hassles.
You Could Be Liable For the Debt – Even Though You Didn’t Receive Any Money
You acted as guarantor and didn’t receive any money but you are the guarantor and that means if the original borrowers don’t pay back the loan you are liable for it. That’s the beauty of loans without guarantors there are no guarantors and no additional burdens to fall on unsuspecting people. Let’s be honest you probably trust your friends and think they won’t leave you to take the burden of the loan on but it can happen. It’s a major risk you need to know.
Your Credit Could Be Affected As A Result Of the Outcome of the Loan
Let’s say the loan wasn’t paid back in full, the burden would fall onto you and that would in turn impact your credit. It doesn’t matter if you pay the loan back or are making arrangements to pay the loan or just refuse to pay; it will affect your personal credit. Guarantors don’t always think or know about this and it causes trouble later. Loans without guarantors don’t need anyone to sign for the borrower but if you have signed, you may find your credit impacted because of it. Check here.
You Might Not Be Able To Get a Personal Loan While the Loan Is Outstanding
In all honesty, you and your credit is attached to the loan and if you go as a guarantor you might find that you personally aren’t able to get the loan you need when the time calls for it. If you’re looking for loans without guarantors but are still a guarantor on another loan until that loan is paid off you mightn’t be eligible for a loan. It’s because of the fact you’re technically liable for another loan and while you aren’t personally receiving the money you’re liable for it and so lenders will be wary of that.
There May Be a Hidden Clause within the Loan Agreement
You are signing to be a guarantor but have you read the entire loan agreement or the parts which relate to the guarantors? Unfortunately a lot of guarantors sign the loan and don’t read anything which is a really bad idea. You don’t know what you’re agreeing too and the defense, ‘I didn’t read the fine print’, aren’t going to work. You need to know what you’re agreeing too. It doesn’t matter if you want loans without guarantors or loans with guarantors, you need to know the risks especially if you’re the guarantor.
Know the Risks
You may love the idea of being a guarantor and helping a friend out but is it really the smartest idea? These loans aren’t terrible but they do come with risks and that is something you really have to be careful of. You have to know the risks in order to avoid them and you never know a guarantor loan might be suitable for you and your friends. Loans without guarantors are of course more popular since there’s no need for guarantors but you have to do what’s best for your needs. Learn more details at: https://www.opalloans.co.uk/loans-without-guarantor