Applying for a Guarantor Loan
We understand the world of finance is a confusing place and it’s sometimes overwhelming to know what you’ll need when making an application. We’ve created a handy step by step guide to applying for a guarantor loan with UK Credit.
1. Work out your costs
Before taking out any loan, you’ll need to work out how much you actually need to borrow.
If you’re looking to purchase a new car or fund some home improvements, doing some research online beforehand will usually help you figure out a budget.
Tip: Lenders tend to offer lower rates for higher loan amounts, try not to be tempted to borrow more than you actually need.
2. Your repayments
Once you have the amount in mind, the next thing is to work out how much you can reasonably afford to repay each month. If you add up all your outgoing costs and minus them from your income, you’re left with what’s known as your‘ disposable income’ this should help you work out how much you can afford to put towards debt repayments.
Tip: While it might be tempting to borrow over a longer period so that your monthly repayments are lower, you will end up paying more interest in the long run. When choosing your loan term, make sure the monthly repayments are affordable.
3. Compare lenders
There are a lot of lenders on the market who each offer different types of loans at various amounts and at different rates. While a comparison site will help you sift through these, it’s also worth checking out lenders own websites to gain more information about them, their services and what happens should you be unable to make your repayments.
Tip: If you have any questions that aren’t answered on the lender’s website, most will be happy for you to contact them directly with any questions.
4. Check their credentials
Many lenders in the UK are regulated by the Financial Conduct Authority (FCA) which means they have to comply with certain regulations. This offers a certain amount of protection to borrowers as regulated lenders are covered by the Financial Services Compensation Scheme (FSCS) and you’ll also have the option to take any complaints to the Financial Ombudsman Service, should you need to.
Tip: You can check if a lender is regulated by looking at the FCA register
5. Get some advice
It may be helpful to seek independent legal advice before taking out any form of credit, particularly if you have encountered financial difficulties or are unsure about what financial product or solution may be best for you. This can be from a financial advisor, citizen’s advice or other parties. They will be able to help give impartial advice about your situation and help you decide if taking out credit is best for your personal circumstances.
Tip: Citizens Advice website provides information on how to find financial advice if you live in the UK.
6. Make your application
Once you’re happy a guarantor loan is the best option for you, and you’ve found a lender you trust, the next step is to begin your application.
Most applications start with an online form which will usually be your basic details, such as your name and contact information. The lender might need you to supply some further details such as proof of income, address and identity. Try and get these as soon as possible to avoid holding up your application.
Tip: Lenders often mention what documents might be needed on their website, so if you can get these prepared before you start your application, you’re already ahead of the game.
7. Keep an eye on your inbox
Most lenders will want to keep you updated on the progress of your application and let you know when you’re required to do something. This could be via email, SMS or telephone so make sure you give them your correct contact details during your application process.
Tip: Adding the lender’s email address to your address book will ensure any important emails from them don’t automatically get sent to your spam box.
8. Check your figures
During the assessment process the lender will need to assess the affordability of the loan. This is usually done by comparing your income and outgoings, often via open banking. They may need to discuss some transactions with you so it’s a good idea to familiarise yourself with your bank statements beforehand to save yourself time.
Tip: Adding a reference when you transfer money using online banking can help you identify payments in the future.
9. Set up your repayment plan
Before paying out your funds, lenders will usually like to confirm how you’d like to make your repayments. There are several options, but setting up a direct debit is generally the easiest way as it ensures you’re less likely to forget about a payment.
Tip: If you’re making manual payments, putting a note in your calendar can help to remind you so you don’t end up accidentally missing a payment.
10. Leave a review
Leaving a review of a businesses service can be useful in a number of ways. For the business, it helps them understand where they might need to make changes to their service to improve the experience for their customers. For future or potential customers, it can help them to gauge an opinion of the business and show them the level of service they can expect.
Tip: Trustpilot is one of the most popular online review sites. Leave UK Credit a review
Please note, none of these articles are intended to constitute financial advice and should be used for informational purposes only.