TIPS TO ASK SOMEONE TO BE YOUR GUARANTOR

Posted by Amelie Wilson on April 10th, 2019

Various short-term loans do not require you to submit collateral, nor ask you to arrange a guarantor despite a bad credit score. Under some circumstance, it can be mandatory. For instance, you need an unemployed loan or your lender has qualms about your creditworthiness.

You can take out an unemployed loan only when you have a source of income like a part-time job or rental income etc. However, not all lenders will approve your loan application. A few lenders will allow you to get the loan only when you arrange a guarantor with a good credit score, hence they are called guaranteed loans.

Unemployment is unexpected. You are likely to have been running out of savings already when your employer lays you off. Credit card bills, utility expenses, medical bills, and other expenses set alarm bells ringing. In such a threatening situation, it might not be very easy to arrange a guarantor with a good credit score. Here are some tips how you can persuade someone to be your guarantor.

Consider your affordability

A guarantor is someone to guarantee your loan. Why will an individual be a guarantor if you are unable to pay off the debt? The first thing before approaching someone you should do is check your affordability. You will have to show your income and expenses to prove that you are able to reimburse your debt. Nobody will like to guarantee the loan unless they are certain about your repayment capacity. You are going to borrow funds, so it is your obligation to pay it back. The guarantor will help you get the loan at a lower interest rate.

Do research

If you are certain that you have a repayment capacity, the next step is to find out a guarantor. Identify the people of your acquaintance who have good credit scores, who pay bills on time, who are great at managing debts. A guarantor with a good credit rating will help you have the loan approved quickly and at affordable interest rates because the lender has to bear less risk. They may all upon the guarantor to pay on your behalf if you fail to pay off.

A guarantor must be financial stable. Apart from credit history, the lender will also evaluate assets that the guarantor possesses. The location also matters so that they can be easily approached when required. Ask your lender about guarantor’s requirements.

Practice a pitch

Convincing someone to guarantee your loan is not easy. Most of the time people deny acting as a guarantor because they doubt that you will not repay your debt. It will not only take a toll on finances of your guarantor but also reduce their credit score. It is important that you convince them to act as a guarantor. Write a pitch and practice that. Step in the shoes of your guarantor and brainstorm what questions you might be asked. Prepare answers for them.

Meet them in person

To make your condition all clear, it is better if you arrange a face-to-face meeting with your potential guarantor. This will help you gain trust and avoid misunderstanding. A guarantor will not agree to give the guarantee unless you show how serious and committed you are. You will also update them the reason for taking out guaranteed loans for unemployed.

Choose a date, time and venue that are convenient to them. It is crucial that they understand your financial condition and credit needs carefully. Make sure the venue you choose is less noisy.

Present a repayment plan

Tell your potential guarantor about your repayment plan. The plan will consist of full details about your income, budget and expenses. This will ensure them that you have enough money to pay off your debt. A guarantor will not agree on your proposal unless they are clear about your repayment plan. Therefore, this must be as convincing as possible.

Once you have discussed your proposal, your guarantor may agree or may deny. If they deny, do not be pushy. If they agree to act as a guarantor, you can apply for the loan application immediately. Your guarantor will also enter into a contract with your lender. Once you get funds transferred to your account, you can use them. You will pay on the scheduled date.