Unsecured lending has gone through many changes over the last few years not least of all because of the move away from me OFT new regulatory regime under the FCA and this alone has made the industry sit up and take notice as they have to change their products, the loan process is under lending structures.
These changes have not just affected lenders, they've also affected brokers, IFA's, accountants in fact anyone who is involved in selling or offering authorised financial services. The products that come under this or:
unsecured loans
guarantor loans
second charge loans
car finance
short-term lending
payday loans
So as you can see the changes have affected a huge proportion of the financial services industry and whilst regulation of the unsecured loan sector in particular, is a good thing, it also means that consumers are becoming more confusing other as to what they can and cannot apply for.
Not your typical high-street borrower who can walk into any branch or building society and apply for a loan, we're talking about a borrower who has a poor credit history and he would not get accepted for a loan by mainstream lender.
The only real alternative for them is a guarantor loan simply because there is no credit score on the borrower, just simply credit check so each guarantor lender can check the interim and outgoings of the individual applying for a loan, to ensure that they meet FCA rules on affordability and that's the only reason why credit check is undertaken on the applicant.
Guarantor loans allow all sorts of bad credit bubble of previously stopped an individual from obtaining any form of loan, credit or finance. The types of bad credit that can be taken into account things like mortgage or rent arrears, missed payments on a loan or credit card, late repayments on catalogue all the finance agreement or even, being outside your authorised overdraft limit, which is becoming an increasingly common problem for people and one of the main reasons why people will get declined for a loan.
As with any type of financial agreement, it is important that the borrower understands what they are getting themselves into, because a guarantor loan lender will look into the details of the loan application closely, even though the only type of credit reference they do is check on the borrowers income and outgoings, and it is important to be as truthful as possible when applying for any type of loan or finance.
The other thing to consider about any type of lending to an individual with bad credit, is that the APR is likely to be higher, much higher, than that of a typical loan that you would get from high-street bank or building society but that's the price you pay for being granted finance even when your credit history is not great.
As most guarantor loans allow for the borrower to be a homeowner or a tenant, again it is important to understand that whenever you apply for a loan as a homeowner, you need to ensure that your home isn't being offered up a security for the proposed loan. If it is and you default on your loan, then your house called (at the very worst) be repossessed in lieu of the outstanding loan repayment.
Same thing can be said of the guarantor themselves and they need to be made fully aware of the consequences to them as the person endorsing this loan, if for any reason you, as the borrower, do not make repayments on this loan and it is important that they have all the facts in front of them before agreeing to become a guarantor for your loan.
We would always suggest that whenever you borrow money, and in this case you may be others borrow up to £12,000, you should seek out the advice of a professional such as an independent financial adviser, who can tell you exactly what your loan options are and whether taking down new credit will help you in the long run, as opposed to just being a short-term fix, which is what most unsecured loans are.
These changes have not just affected lenders, they've also affected brokers, IFA's, accountants in fact anyone who is involved in selling or offering authorised financial services. The products that come under this or:
unsecured loans
guarantor loans
second charge loans
car finance
short-term lending
payday loans
So as you can see the changes have affected a huge proportion of the financial services industry and whilst regulation of the unsecured loan sector in particular, is a good thing, it also means that consumers are becoming more confusing other as to what they can and cannot apply for.
Not your typical high-street borrower who can walk into any branch or building society and apply for a loan, we're talking about a borrower who has a poor credit history and he would not get accepted for a loan by mainstream lender.
The only real alternative for them is a guarantor loan simply because there is no credit score on the borrower, just simply credit check so each guarantor lender can check the interim and outgoings of the individual applying for a loan, to ensure that they meet FCA rules on affordability and that's the only reason why credit check is undertaken on the applicant.
Guarantor loans allow all sorts of bad credit bubble of previously stopped an individual from obtaining any form of loan, credit or finance. The types of bad credit that can be taken into account things like mortgage or rent arrears, missed payments on a loan or credit card, late repayments on catalogue all the finance agreement or even, being outside your authorised overdraft limit, which is becoming an increasingly common problem for people and one of the main reasons why people will get declined for a loan.
As with any type of financial agreement, it is important that the borrower understands what they are getting themselves into, because a guarantor loan lender will look into the details of the loan application closely, even though the only type of credit reference they do is check on the borrowers income and outgoings, and it is important to be as truthful as possible when applying for any type of loan or finance.
The other thing to consider about any type of lending to an individual with bad credit, is that the APR is likely to be higher, much higher, than that of a typical loan that you would get from high-street bank or building society but that's the price you pay for being granted finance even when your credit history is not great.
As most guarantor loans allow for the borrower to be a homeowner or a tenant, again it is important to understand that whenever you apply for a loan as a homeowner, you need to ensure that your home isn't being offered up a security for the proposed loan. If it is and you default on your loan, then your house called (at the very worst) be repossessed in lieu of the outstanding loan repayment.
Same thing can be said of the guarantor themselves and they need to be made fully aware of the consequences to them as the person endorsing this loan, if for any reason you, as the borrower, do not make repayments on this loan and it is important that they have all the facts in front of them before agreeing to become a guarantor for your loan.
We would always suggest that whenever you borrow money, and in this case you may be others borrow up to £12,000, you should seek out the advice of a professional such as an independent financial adviser, who can tell you exactly what your loan options are and whether taking down new credit will help you in the long run, as opposed to just being a short-term fix, which is what most unsecured loans are.