If you're in the market for a personal loan, weighing the pros and cons of the financial product you're applying for is very important. Take for instance guarantor loans. As a type of personal loan for people with bad credit, the product is certainly attractive because it promises quick cash. At the same, you also need to be extra careful with the risks involved as it may lead to financial consequences that will hurt your credit rating even more. To verify if the loan product is right for you, below are pros and cons you should weigh.
While guarantor loans are relatively new in the market, the product proved to be significantly useful for certain groups of borrowers. To be specific, the product has been highly demanded and availed by people with bad credit because of the following advantages.
Because there is no asset involved to serve as security or collateral, the risks and disadvantages with guarantor loans are pretty low.
Cost-wise, the product is more expensive than traditional personal loans such as a homeowner's loan. But considering that you have bad credit, a Representative APR of 50% isn't too bad. In fact, the rate is affordable enough than other secured loan types such as logbook loans with higher risks.
Another slight disadvantage with guarantor loans is the guarantor requirement. It's not always easy to find a suitable and qualified guarantor to back you with your application. But if you do find one, application and approval should be extra easy and fast.
With the pros and cons of a guarantor loan laid out, it’s now up to you to weigh both sides reasonably. And if you do decide to go ahead and apply for a guarantor loan, just remember the simple rule to borrow only what you need and you can afford. Making sure that you are capable to make monthly repayments until the end of term is the key to successful borrowing no matter what product you choose.