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Guarantor and Unsecured Loans

In these types of loans, guarantors take up full responsibility when the borrowers fail to hold up to their end of the bargain. Today, several business enterprises, mortgage companies and even landlords require guarantors as a medium to gauge people’s behaviour towards payments. Usually, the guarantor is a relative, a trusted friend or a co-worker of the applicant. In such cases, the guarantor knows the borrower well and the need for routine credit checks gets nullified.

Guarantors serve the purpose of providing surety as they cannot lend the money to the borrowers themselves. They also help in the building up of good credit on part of the borrower. They can be a source of motivation to the borrowers in their attempt to learn to handle their finances better.

These loans are arranged without the need of any collateral placement for securing the money. They are smaller in nature when compared to the secured loans and they are issued with higher interest rates to cover the nature of the risk the creditors have to take while lending out the loan amount. It is possible to achieve lower APRs in the case of secured loans as in the case of a payment default, lenders could simply seize the collateral or assets and then resell them to recover the loan amount.

As unsecured loans are not secured against assets, there can be no guarantee of any recoverable value through properties. A guarantor loan could be an example of such arrangements. They are designed for borrowers who maintain a poor credit rating.

Logbook Loans

These loans help the borrower to receive loan amounts against the logbook and current value of their cars, vans or motorcycles. The ownership of these vehicles gets transferred to the lenders during the tenure of the logbook loan. The borrowers could continue to use the vehicles while they pay off the loan in monthly or weekly instalments. When the loan amount is fully settled, the vehicle becomes the property of the borrower, once again.

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