In general, the Guarantor Loans are unsecured loans that do not require a collateral to be pledged as security in order to secure the loan. A Guarantor loan is an unsecured type of loan that requires a Guarantor to co-sign for the agreement. A Guarantor is usually a business entity or an individual who is known to you and act as your agent in receiving the loans.
There are two types of Guarantors who are available. The first one is called the third party and the second one is called the joint guarantor. In general the third party is someone who can afford to pay the installments and a joint guarantor on the other hand is made by both of them. It will be the responsibility of the third party to pay off the debt if the third party defaults on their debt obligations.
The Guarantor loans are categorized into two types i.e., secured, and unsecured. The secured types are those which require the pledging of property like a home, car etc. to be secured. The unsecured type is classified as secured and unsecured based on the amount of the loans, the type of property being pledged and any other collateral that may be placed.
In both of the cases the amount will be decided according to the repayment capacity of the borrower, interest rates that are charged for the loan and the period in which the loans would be approved. The interest rates charged will depend on how much money is being borrowed and the duration of the loan agreement.
If the borrowers fail to make payments then they may take over the ownership of the property if they have a lien on it and there are lenders who will buy up the property for the loan. On the other hand, if the loans are unsecured then the borrowers will not have to pledge any property as security.
The Guarantors have two different types of obligations. The first obligation that a Guarantor has been to the lender is the right to the borrowers to pay the debt in full on the agreed time without delay or any other penalties that the lender may impose. The second obligation that a Guarantor has to the lender is to agree to pay the debt if the borrower’s default in their payment obligations.
For the first obligation it will be the responsibility of the Guarantor to find out if the borrower is able to pay off the loan on time. If the Guarantor finds that there is no way by which the borrowers will pay the loan, then it will be the responsibility of the Guarantor to bring a bankruptcy case to the court of law against the borrower.
The second obligation of a Guarantor is to pay off the debt in full on the agreed time. The reason that the Guarantor has to get the case brought against the borrower is because in bankruptcy cases the borrowers have no other way to get out of their financial problems than filing a bankruptcy against them.
The guarantor loans can also be applied for online by searching online for lenders that deal with the borrower. These lenders will then help you in finding the best type of guarantor loans that are suited for your requirements.
The lenders will help you in comparing the different types of loans offered by them so that you will be able to choose the most suitable one for you. These lenders will also be able to explain all the benefits and disadvantages of the different types of loans offered to you. So that you will know which one you should choose.
When you apply for the loan, you should always make sure that you read all the fine print and ensure that there are no hidden fees or charges in the loan. If you find any hidden charges then you should make a note of these and then do not sign anything in writing as this will void all the points stated in the contract.
The lenders will take the application form and submit it to the creditors, in return, they will be able to process the application and get it processed without any hassle. After the approval of the application form the creditors will then process the loan by sending it to the bank where you got the loan.