Access to credit, due to the crisis of these years, is not always easy. For this reason, lenders and financial companies offer the possibility to apply for loans with guarantor.
How the guarantor loan works
How do guarantor loans work? In which cases can they represent the best solution? We begin to answer the first question in mind that the personal loans with guarantees based simply on presentation, at the time of signing the loan agreement, a third party can guarantee the solvency of the installments.
Filing a guarantor may be necessary not only when the loan recipient is unemployed, but also if he is a freelancer who does not receive a paycheck and safe income every month. This occurs especially when the applicant needs high sums and for which the guarantees in his possession are not sufficient.
For example, a person hired with an employee contract that receives one thousand USD a month will not be able to obtain a loan with a monthly installment of 500 USD.
However, if you have recourse to the help of a guarantor who has adequate guarantees, you will be able to pay monthly installments even with rather high amounts and consequently you will get more liquidity.
Requirements for obtaining loan with guarantor
In order to be able to play the role of guarantor, the third party must be in possession of guarantees such as to give the bank the certainty of repayment in the event of default by the debtor. In the event that the borrower has problems with the repayment of the loan, the guarantor will have the task of paying off the debt.
It is necessary to specify that, as already mentioned, guarantor loans do not always belong to the category of loans without paychecks. In the same way, the person who proposes himself as guarantor must not necessarily receive a pension or an income from work.
In fact, it is possible to assume the role of guarantor even if you own a property or if you receive high financial income.
When the guarantor is needed
Now that we have seen what the general characteristics of guarantor loans are and what the role of this figure is, let’s try to understand when it is really necessary to resort to a third party to obtain a loan.
The centerpiece of the issue is the relationship between installment and income. Although the granting of a loan depends on several factors and each lender may choose to apply different conditions, it is possible to find a basic rule for calculating the installment.
Rule providing for a maximum duration of 20% of the monthly income of the applicant. In other words, with a monthly income of 1000 USD it will be possible to obtain a loan with a maximum installment of 200 USD.
That said, it is easy to understand when a guarantor may actually be needed. However, we must remember that the installment-income ratio is only one of the factors considered by the banks that could still require the presence of a guarantor even if the installment reflects this parameter.
Astro Finance personal loans with guarantor
There are numerous credit realities that allow customers to apply for guarantor loans. In this category it is possible to remember Astro Finance, with the base product “Your Projects”. How does it work? To understand this, let’s take a specific example, assuming the request for a non-finalized loan of $ 15,000 and the choice of a 5-year amortization plan.
In this case, the customer would pay a monthly installment of $ 292.80, with a fixed TAN of 6.39% and an APR of 6.58 (total debt of $ 17,568).
The Best Bank offer
Best Bank also allows customers to access a secured loan. The Best Bank product is in fact also available to those who, despite not having a paycheck or a job in general, have the opportunity to present a third guarantor.
To understand whether it is convenient or not, let’s make a specific example once again, always assuming the request for $ 15,000 (loan not finalized).
In this case, a monthly installment of $ 321.15 would be charged to the borrower, with TAN and APR equal to 9.90 and 11.06% respectively (total debt $ 19,355).
The function of the guarantor: some technical clarifications
After providing some information on the products available for those looking for personal loans with guarantor, the time has come to give some technical clarifications. First of all it is necessary to speak of the nature of the figure of the guarantor, whose intervention has an extraordinary character.
This means that the subject does not have the right to replace the main beneficiary of the loan in the payment of the installments.
Another aspect to be explored concerns reliability: applying for a loan with guarantor implies the choice of a person with a solid economic situation – better if it is the holder of a permanent employment contract – and with a clear credit history.
We conclude by specifying that no credit institution or financial company is obliged to grant a loan with guarantor, even if the third party presented is financially reliable.