The risks and hazards of guarantor loans have been highlighted recently, following a report from Citizens Advice. In the report, the Citizens Advice Bureau has highlighted concerns about the risks of being a guarantor, although incidences of problems are still very low.
In the report, the Citizens Advice Bureau has identified the 4 following main areas of concern:
Here at Guarantor My Loan, we welcome any investigation or highlight of industry bad practice, and it’s disappointing to see that customers don’t always understand what it means to become a guarantor. One case study highlighted that one guarantor thought they were simply providing a character reference, rather than being liable for any loan payments which are not paid by the borrower. Understanding what it means to be a guarantor is of high importance – something which we strive to ensure. We do this by always speaking to the guarantor directly, and telling them exactly what is expected of them and their role should the borrower fail to make a payment. If you need any guarantor advice, please do not hesitate to contact us.
Although this issue does not affect guarantor loans exclusively, it has been flagged up as a potential problem within the industry. Unfortunately, as with many kinds of business, there will always be companies and/or individuals who will try to skirt around the regulations in order to make as much profit as possible. To legally be able to lend money, all loan companies – big and small – have to be registered and approved by the Financial Conduct Authority. The FCA take a strict stance on how lenders should behave and will enforce their Treating Customers Fairly policy. This protects the customer and ensures that the fair treatment of customers is at the very centre of the business model.
When thinking about who can be a guarantor for your loan, you should consider their earnings as well as how well they fit within the criteria. At Guarantor My Loan we ask that a guarantor is over 21, that they’re a tenant or homeowner and that they have a good credit record. Although a guarantor stepping in and paying instalments is the exception to the rule, we still make sure every guarantor also completes an affordability check; this is just to make sure that if the worst does happen, they’ll be able to cope with it financially. We do not believe in leaving people in an unmanageable financial situation and work hard to try and eradicate this for our customers.
Owing money and not being able to pay it back due to unforeseen circumstances can be a very scary thing. The last thing anyone needs in a situation like this is threatening letters, phone calls or being visited by bailiffs or similar. At Guarantor My Loan, we will communicate with both you and your guarantor to try and come to an arrangement which makes things easier for everyone involved. We will always do this before taking more serious legal action. We will treat you like a human being and endeavour to keep you informed every step of the way.
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Guarantormyloan.co.uk. We are authorised and regulated by the Financial Conduct Authority. Interim Licence 661304
Registered in England as Match The Cash Ltd. Registration Number: ZA055459 (ICO)
Registered Office: MATCH THE CASH LIMITED ACRE HOUSE, 11/15 WILLIAM ROAD, LONDON, UNITED KINGDOM, NW1 3ER. Company No. 08667447