What is a guaranteed loan?
An important obstacle to obtaining a loan or credit is the low creditworthiness, i.e. the doubtful ability to repay the obligation within the contractual deadline. For both parties - the client and the financial institution - these are not pleasant circumstances. Fortunately, many banks and companies offer consumers a so-called loan with a guarantor. What is this type of commitment? Who can guarantee the borrower? What conditions must the guarantor meet?
The applicant's financial capacity is one of the main criteria to be taken into account in the award decision. Where the service provider has doubts about the solvency of the future debtor, he may request a guarantee. In this case, there is nothing else left to the borrower but to find one or two chandeliers that meet certain conditions.
On credit and loan
The guarantee institution is used by both banks and companies providing financial support. A specific equivalent of a commitment with a chandelier, from the point of view of the idea itself, is a loan under the pledge of a real estate or a car. In this way, the lender is guaranteed to return the funds together with accrued interest. If the borrower fails to repay a certain amount within a specific period of time, the guarantor is obliged to do so. The Bank may require it to pay a loan instalment, and the Bank is responsible for the loan with its assets.
When do you need a warranty?
It is necessary to secure a loan or credit if the applicant cannot boast sufficient creditworthiness or there is a suspicion that he will not be able to repay the debt in the future. The guarantee also helps to obtain a larger loan amount. In many cases, thanks to the signature of a chandelier, the borrower can also count on a lower total cost of the commitment and a more flexible loan term.
Who can be a guarantor?
In short, the guarantor must meet the same conditions as if he were applying for a loan himself. Its credit history should show responsibility and credibility. The financial institution will check the guarantor's details in the registers of debtors. Very often loan companies make the possibility of securing receivables conditional on a chandelier owning, for example, a real estate that can be additionally pledged.
Cooperation for the common good
A loan with a guarantor is a specific type of commitment in which mutual trust between the borrower and the guarantor plays an important role. Many companies choose the option of transferring funds to a chandelier account, which only transfers them to the debtor. The most important thing therefore seems to be an agreement. It is for this reason that the guarantor should be a person who is well known to the borrower.
Is it worth it?
More and more people decide to make a commitment with a guarantee. This is a financially advantageous solution - you can get a loan on better terms and a longer payback period.