Last post: Apr 24, 2018
You’ve taken on a guarantor loan. You’ve persuaded your guarantor to sign on the dotted line and don’t expect any issues. Unfortunately, financial problems arise. Before you panic, here’s why you should talk to your loan provider ASAP.
Problems with repaying any loan can be incredibly stressful. As soon as you realise you may not be able to meet a repayment on time, it's normal for visions of worst case scenarios to flash through your mind. Your home is repossessed, bailiffs are hounding you, it's a financial nightmare…
This thought pattern can be even more alarming if you're making use of a guarantor loan. The minute repayments are delayed you picture your creditor hounding your guarantor, causing them financial woes and ruining your personal relationship.
But wait! Before you panic, read this…
Problems with meeting repayments aren't ideal, but they're rarely the end of the world. Your lender should have checked the affordability of your repayments before approving your guarantor loan. This means serious difficulty is unlikely. If small problems arise, it's also incredibly unlikely that your creditor's first course of action will be to aggressively pursue your guarantor. This simply isn't in their interests.
Instead, what is in a creditor's interests is to find a solution to your repayment issue. This may taking actions like reducing monthly repayments while extending the loan period (bear in mind that this will increase the amount of interest you pay overall).
Finding solutions like this is common, but it can only happen if you are up front and proactive when it comes to dealing with any repayment issues which arise.
Instead of letting problems worsen without letting your creditor know - until the problem reaches crisis point - it's incredibly important that you flag up possible problems as soon as you anticipate them. Discussing these issues with your creditor and your guarantor will help you to find an approach which is in the best interests of all parties.
Want to learn more about using guarantor loans? Browse our blog for more insight or find out more about this financial product from our expert advisors today.
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