Last post: Aug 23, 2018
With the FCA applying ever more stringent guidelines surrounding income confirmation, it's increasingly tough for individuals between jobs to access finance, but guarantor loans offer an alternative...
Whether you're taking a career break, returning from travelling, have suffered from a spate of ill health or found yourself between job for one of many understandable reasons, you'll know just how tricky it is to arrange all sorts of financial matters. Accessing finance while you're out of employment is perhaps one of the very trickiest things to do, often during a period in which you may have greatest need of flexible funds.
Why is it so hard to borrow outside of employment?
The reasons behind the industry's inability to lend to people with no formal employment are understandable - and stand to reason. Lending to individuals who may not have the means to repay the loan (as evidenced by a dependable income) is a risky proposition for lenders. It's also a risky proposition for borrowed who may face spiraling fines and costs if they are unable to repay their debt. This is why the Financial Conduct Authority (FCA) has been implementing ever stricter regulations designed to confirm would-be borrowers' incomes.
Unfortunately, these regulations also make it nigh-on impossible for those not currently in formal employment to access short term finance (especially unsecured loans) - even when they have the ability to repay on time.
The alternative...
But there is another option. Guarantor loans are an alternative route to short term finance which people without regular employment can make use of. The concept is simple, a borrower asks a friend of family member (who much meet certain criteria, often including having a provable income) to guarantee their loan. If the borrower is unable to meet repayments, responsibility for repayment falls to the guarantor.
This process provides access to short term loans for individuals who may not have a traditional employment setup, or who may be between jobs. Of course, this individual will need to prove to their guarantor that they will be able to repay the loan, otherwise the potential guarantor is likely to refuse to sign on the dotted line. However, those able to demonstrate that they will be able to cover repayments, may be able to persuade trusted people in their life to guarantee this form of finance.
Have you used a guarantor loan before? What were your experiences? For more information about using guarantor loans - or to start the process today - explore our service online.
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