This is a question we get asked quite often following our Q&A sessions.
“I am looking to get a guarantor loan, however the person I wish to use is self employed, does this matter?”
The short answer is YES, your guarantor can be a self employed person or contractor. However, they must meet the mimimum income requirements, be able to show proof of their income via bank statements and company accounts (where applicable) and have a steady income that can be proven. It is important to note that each lender will have their own rules and requirements with who they accept as guarantors and come may be more picky than others. Most lenders require that your loan guarantor be a homeowner or someone with a very strong credit rating, however there are a few lenders who accept tenants and non homeowners as guarantors.
Here is a typical example from Amigo Loans: community.amigoloans.co.uk/answer-centre/question/view/whats-the-guarantor-criteria
Here you can compare different guarantor lenders together: lendingexpert.co.uk/loans/guarantor/
What other requirements do I need to get a guarantor loan?
Again this question very much depends on the lender you wish to choose. Some lenders put more ownership on the guarantor, and less on the main applicant. This means they will accept a main applicant who has a low credit score, but in this case will need a suitable guarantor with an excellent credit rating to back them up. This is also the case where the guarantor lender will accept a tenant as a guarantor, but they will look more closely at the main applicant and will accept less of a poor credit score. Therefore if you happen to be turned down for a loan or refused credit one a particular provider or lender then this isn’t to say that another lender will also.
Getting a loan decision
The guarantor loan provider should be able to give you a decision in principle following a detailed application, they will check your credit rating, score and profile and will also check the details and information of your guarantor also. If your loan application is successful they will then provide you with a loan offer which will highlight all the details, loan amount offered, rates of interest and terms and conditions. It is then very important at this stage to check and read all of this information to check it is accurate and meets your needs. Your loan guarantor will also need to check this and to ensure they are happy with it also.