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Been looking into guarantor loans to improve your chances of approval, but still not sure exactly what they are or how they work? We get it! That’s why today we are taking some time out to explain the key things you should know about guarantor loans. So let’s start with the basics.
A guarantor is simply a loan where another person provides a guarantee that if the borrower defaults on the debt, they will assume responsibility for it. By providing this guarantee, there is much less risk for the lender, which improves the chances of approval. These loans are provided in all sorts of situations, so whether you are looking for car loans, renovation loans, or rental bonds loans, a guarantor loan may help you on your way. For other fast loans, check out Nifty today.
Nifty Loans works tirelessly to bring you guarantor loans soon! While we do not yet offer formal guarantor loans just yet, we are working on it. Very soon all of our loans will have the option to list another person as a guarantor. We believe that all different types of finance have a place in the market, which is why we are constantly trying to improve our service offering. So, keep an eye out as soon this will be an option in our application form.
That being said, we still have plenty of other products that may still meet your lending needs! But before we talk about our other products too much, let’s discuss the topic at hand; guarantor loans!
You might be wondering in what situations people consider and apply for guarantor finance. The most common types of loans they are used for include:
This is not an exhaustive list either! There is almost an unlimited number of uses for guarantor loans. So if you have a loan in mind for a particular purpose, don’t be afraid to ask your lender if there is the option to add a guarantor.
You might be wondering, are guarantor loans the same as joint loans? While they do have some common characteristics, they are not the same thing. They both involve two people having some degree of responsibility for the loan. Both options provide an increased chance of approval as multiple people can be asked to repay the loan. The main difference is who has the primary responsibility for the loan.
In the case of joint loans, the responsibilities for the debt are usually shared evenly between the parties. In a guarantor loan, the main borrower will have the primary responsibility to repay the account, and only after they have failed to do so can the guarantor be called up to help pay down the debt. For more information on joint loans, you can also check out our page dedicated to them.
Yes! Often with joint loans, both borrowers are assessed together, while a guarantor loan is assessed on a more individual basis. As a guarantor loan requires the initial borrower to be able to repay the loan on their own, they are assessed individually. The guarantor is then assessed as a type of backup as if the borrower does not have the capacity to make the payments the loan can become the guarantor’s responsibility. This will often mean that both parties involved will need to meet the lenders criteria (and that’s assuming your chosen lenders offers guarantor loans).
If you are not sure of the criteria for a given lender’s loans, you should always contact them first to see if the product is something you could qualify for.
Let’s get into some of finer detail and explore some of the real advantages of these types of loans.
Because of the reduced risk for a creditor, getting approved for a guarantor loan can be much easier than going it alone. Particularly if you have bad credit or other risk factors that could be holding you back. As there is now a backup borrower, the lender may be more lenient with their lending criteria.
Along the same lines of an increased chance of approval, there is also a chance to be approved for a higher amount than what you could on your own. Most lenders determine the maximum borrowing limit of a borrower based on, in part, their risk. With what is essentially a backup borrower, a lender may see the loan as a lower risk and be willing to approve a higher amount.
Life is full of little surprises! Things happen when we least expect. You might fall ill, lose your job or suffer some other event that impacts your ability to repay the loan. In these cases, it may be a godsend to have a guarantor who is willing to help you. This person or people have a vested interest in making sure the loan is repaid, which should take a huge weight off your mind if the worst should happen.
Guarantor loans have a number of advantages, but they have an equal number of disadvantages. The financial disadvantages often fall to the guarantor, while the risks to the main borrower are largely personal risks.
As a guarantor, you need to agree that you are willing and able to take on the debt if the need arises. However, this is not something that most of them would not want or expect to actually happen. If this situation should arise, it can also impact the credit history of the guarantor as well. So if you are not careful, you could end up paying for another person’s entire loan.
If you were to default on your loan and your guarantor had to take over the repayments, this could strain more than their finances. This could lead to a real strain on your relationship with them, whatever that may be. So you always need to consider the implications that such a situation would have on your friends and family.
There are a number of pro’s and con’s for taking out a guarantor loan, and these also depend on if you are the primary borrower or the guarantor. So before taking out one of these loans, you should consider all the ways it may impact you. If you are ever unsure about one of these products or looking to take one out, you should always seek independent legal or financial advice.
Nifty is a 100% online lender that aims to offer all Australians a fair go at finance. Our small online loans are designed to cover a range of different needs and situations; including being available for people on Centrelink and those with bad credit. So while we don’t strictly offer guarantor loans yet, we do offer a range of different products that could be right for you. For a breakdown of our personal loans, you can find the basic details in the table below. You can also see more information about our loans on our costs page and how it works page.
|Loan Type||Amount||Term (Months)||Joint Loan Available||Can the loan can be secured by vehicle?|
|Large Personal Loan||$5,000||9 – 24||Coming Soon||Often requires Security|
|Medium Amount Loan||$2,100 – $4,600||9 – 24||Coming Soon||Can be Secured|
|Small Cash Loan||$300 – $2,000||6 – 9||Coming Soon||Unsecured Only|
You may have stumbled onto this page because you have been unable to get approved for finance on your own. Sound familiar? It’s ok, we get; getting the finance you need can sometimes be difficult, especially if your credit history isn’t the best. That’s why Nifty is proud to offer bad credit loans.
We don’t think you should necessarily be penalised for one default that happened years ago. We assess you on a number of different factors and focus on your current relationship with money. So if you are concerned about applying because of your bad credit history, don’t be, because you can still apply with Nifty Loans. For more information on our bad credit loans, you can also check out our bad credit loans!
So, keep an eye on Nifty news and updates, as our guarantor loans will be arriving very soon. In the meantime, we still offer a range of other products that can suit your needs in the meantime. If you have any questions about anything in this article or anything else for that matter don’t be afraid to reach out to use on our Contact Us page.Apply Now
Since founding Nifty in 2016, Bell has continued to make waves within the local financial sector for his continued ambition and willingness to adopt emerging technologies.Read More
$5,000 - $10,000
$2,001 - $4,600
$300 - $2,000
* Not applicable. Small loans do not charge an annual interest rate.
** WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Different loans may include other payable fees and charges. All fees and charges will always be displayed on your loan contract.