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Tenant guarantor loans are a type of financial product designed to help tenants with limited or poor credit histories get loans by having a guarantor co-sign the loan agreement. A guarantor usually has a stable financial background and agrees to repay the loan if the tenant (the borrower) defaults. These loans are mainly aimed at individuals renting a property. Being a tenant and having no property of your own makes it difficult to qualify for traditional loans due to the lack of collateral or creditworthiness.
There are various benefits of borrowing a tenant loan with a guarantor. However, you must also know the drawbacks before you borrow this loan.
Benefits of Borrowing a Loan as a Tenant with a Guarantor
Drawbacks of Tenant Guarantor Loan
Now that you know the benefits, you must know the disadvantages of this loan to make an informed decision.
The eligibility criteria for a tenant loan with a guarantor will vary from lender to lender. Different lenders have different levels of risk appetite, and hence, their lending criteria may also differ.
Below, we have listed a few common factors with almost every lender. However, it is always better to check for the eligibility criteria of the lender you are applying to.
To borrow a loan being a tenant with a co-signor, you need to find a suitable person who will agree to act as a guarantor for your loan. To find the right person, you must learn a few things about the type of person who can be a co-signor.
Let us understand more about it in detail.
Who can be a Suitable Guarantor for a Tenant Loan?
Lenders may have their criteria for approving the guarantor you are providing. However, a suitable guarantor is typically someone who:
Responsibilities and Obligations of a Tenant Guarantor Loan
Although you will borrow a loan with a co-signor, you have some responsibilities as a borrower. So, what is your responsibility as the primary borrower of this loan?
Your responsibilities of being a borrower are:
Considerations for Choosing a Reliable Guarantor for a Tenant Loan
Consider a few factors when choosing someone to co-sign your tenant loan application.
When choosing a guarantor:
Assessing the Financial Capability of a Guarantor to Borrow a Tenant Loan
A guarantor should have a stable and reliable financial backbone so that in case, as a tenant, you fail to repay the loan; they will step and repay the balance.
But how do you assess the financial capabilities of your co-signor? Here are a few tips to help you get started with it.
Assess a potential guarantor’s financial capability by:
While filling up the application form for a tenant loan with a guarantor, you will need to quote the loan amount you aim to borrow. Along with it, you will also have to choose your repayment horizon.
Let us delve deeper to understand how it works.
Determining the Loan Amount you can Borrow
It is one of the most critical factors influencing the lender’s decision about your loan application.
The loan amount you can borrow through a tenant loan with a guarantor in the UK depends on factors such as:
Repayment Period and Options Available with a Tenant Guarantor Loan
Decide the repayment period as per the amount you are borrowing. Different lenders will have various options for repayment.
The repayment period and options can vary:
Check the monthly instalment amount you must pay each month and choose a repayment period per your financial circumstances.
Interest Rates and APR for Tenant Guarantor Loans
The interest rate and APR for tenant loans with a guarantor is decided based on various factors. It is not fixed, so it cannot be said how much interest rate the lender may charge you for the loan you are borrowing.
Interest rates and Annual Percentage Rates (APR) for tenant guarantor loans can be influenced by:
Impact of Loan Amount and Repayment Terms on Affordability
The amount you borrow and the repayment period you choose will impact your affordability. Further, it may lead to a disturbed financial budget if the loan is managed responsibly.
The loan amount and repayment terms impact affordability:
We have compiled everything you must know before applying for a tenant loan with a guarantor to make the process easy and seamless. Right from understanding the list of documents you need to the credit checks your profile will go through – here is everything you need to know before applying.
Let’s start with the documents.
Necessary Documents for Tenant Guarantor Loan Application
Lenders and financial institutions may have different internal loan approval process requirements. Hence, the documents you will be asked to submit may vary from one lender to the other.
However, generally, you may be asked to submit the following documents for a tenant guarantor loan application:
Applying for a Tenant Loan with a Guarantor in the UK
You can easily apply for a loan as a tenant with LoanTube. We have partnered with different reputed lenders in the UK who are authorised by the Financial Conduct Authority (FCA).
Here’s how you can apply with us:
Once you apply, it will be assessed by our pool of lenders. Within a few minutes, you will get the list of lenders willing to offer you the loan with the interest rates and APRs.
You can easily compare the quotes you received from the lenders and choose the one that seems suitable to your circumstances.
Roles and Responsibilities of the Tenant and Guarantor during the Loan Application Process
Taking a loan brings many financial responsibilities that must be taken care of. Whether you are the borrower or the guarantor of the loan – you must be aware of your roles and responsibilities to avoid any financial troubles in the future.
We have broken down the roles and responsibilities of the tenant and the guarantor separately to help you understand it clearly.
Roles and Responsibilities of a Tenant
Roles and Responsibilities of a Guarantor
Credit Checks and Affordability Assessments
When you apply for a loan, the lender will assess your credit profile to determine your creditworthiness. The lender must evaluate your credit history to decide the loan terms, interest rates and APR. Your credit score reflects your financial behaviour; hence, this is the first thing the lender will do once they receive your loan application.
Let us understand more about it in detail.
If you are unsure about borrowing a loan from a lender and want to get a quote from them, check if they conduct a soft credit check.
Lenders associated with LoanTube conduct a soft credit check to offer you loan quotes. A soft credit check doesn’t leave a footprint on your report and doesn’t reduce any points from your credit score.
Several lenders and financial institutions offer tenant loans with guarantors in the UK. You should borrow the loan from a lender whose terms and conditions align with your financial horizon.
Banks and Financial Institutions Offering Tenant Guarantor Loans
Several banks and financial institutions in the UK offer tenant guarantor loans. Checking with local branches or their websites for specific loan offerings is recommended. You may directly contact them for your queries.
Online Lenders Specialising in Tenant Guarantor Loans
Online lenders such as UK Credit, Everyday Lending and Bamboo Loans (See our Partner Lenders) specialise in loans in the UK. These lenders often provide a streamlined online application process. If you wish to apply with any of our lenders, you only need to submit your application. It will take a couple of minutes to fill in the required information. You can apply to multiple lenders with us with a single application form and get different quotes.
Comparison of Interest Rates and Terms from Different Lenders
Comparing different loan quotes in terms of interest rates and APRs from various lenders will help you find the best offer. If you apply to one lender and do not research, you might miss out on proposals with a comparatively lower interest rate. A loan with a low-interest rate will help you save money in the long run.
LoanTube makes it easy for you to compare loan quotes in terms of interest rates and APRs, as we have a single application form. You do not have to visit multiple websites and fill in different application forms to get loan quotes. You can get various loan quotes with a single application form.
Also, as you will get all the available offers on the screen, you can easily compare and choose the lender whose offer seems feasible.
Considerations for Choosing a Reputable Loan Provider
Now that you know how to apply for a tenant loan with a guarantor, you must know how to find a reputable lender for your needs.
Listed below are a few factors you must consider while choosing a reputable lender:
There are various rights a tenant and the co-signor can exercise if they find something that could be more financially comfortable for them. To exercise your rights, you must know what they are and the protections you can get as a tenant and a guarantor while borrowing the loan.
Understanding the Legal Obligations of the Tenant Guarantor
You will be under a few legal obligations when you sign the dotted line for your loan. When you agree to enter into a legal contract with the lender or the financial institution, you must adhere to the terms and conditions agreed by you while borrowing the loan.
Your legal obligations may include but not limited to:
Rights and Protections for Tenants and Guarantors Under the UK Law
You will have your rights and protections as a tenant and co-signor.
Clarifying the Duration and Scope of the Guarantor’s Responsibilities
As a guarantor, you must know the exact role you will be playing in the loan. The lender should clearly explain the risks you will take, which may impact your future borrowings.
Ensuring Transparency and Communication between Tenants and Guarantors
The communication regarding the loan must be clear and regular between the tenant and the guarantor. If the tenant at any point feels that they may not be able to repay the loan, they must immediately talk to their co-signor.
Also, the guarantor should discuss anything troubling them regarding the loan with the borrower so that they are both on the same page.
Here are a few tips to help you get started on maintaining transparency:
Calculate monthly payments
71.3% p.a (fixed)
Tell us how much you need, for how long, and for what purpose.
We find you the loan offers you qualify for from multiple lenders.
Select the loan that best matches your circumstances, and Get Funded.
Each lender has a different process for making a decision. Documentation begins after the lender approves your loan. Once all the formalities are complete, your lender will deposit the funds in your account. After you receive the funds, you can use them at your discretion, albeit responsibly.
If you or the guarantor don’t settle the debt, it may not be possible for you to get out of your guarantor agreement. You can terminate your guarantor agreement if:
Paying the dues would be the simplest way to end the guarantor agreement. As soon as both parties fulfil their obligations, the contract will be null and void.
You can borrow up to £35,000 for 12-84 months with LoanTube.
Our mission is to help you find the right loan – we do not charge an upfront fee from our users.
The rate you are offered will depend on your individual circumstances.
Representative APR Example: On an assumed loan amount of £1,000.00 over 18 months. Rate of interest 71.3% per annum (fixed). Representative 99.89% APR. Total amount payable £1,655.10 of which £655.10 is interest. 18 monthly repayments of £91.95.
Our APR rate starts from 18.22%. The maximum APR we offer is 770%, but you will get a personalised rate tailored to you. The minimum repayment term is 3 months, the maximum repayment term is 7 years.
Warning: Late repayment can cause you serious money problems. For more information, go to moneyhelper.org.uk
Credit subject to status & affordability assessment by Lenders.
LoanTube is a credit broker and not a lender.
Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on any debt secured against it.