By Nigel Norman, Marketing Administrator at Logbook Loans provider Auto Advance, which is a member of the Consumer Credit Trade Association.
Guarantor loans have many pros and cons in providing a solution to help people with bad credit quickly access a flexible, low-interest, loan and rebuild their credit history. As with any form of short-term finance, there are pros and cons.
If you don’t meet the criteria for a standard bank loan, or are judged as a poor credit risk, your application will be rejected. A guarantor loan, offered by banks and other lenders, can be a workable alternative for people with poor credit. All you need is a friend or family member to agree to make payments on your behalf if you can’t repay the loan.
The Good News
- Flexible and fast – guarantor loans can be tailored quite well to how much money you borrow and the time you can take to pay it back. You might be offered one to five-year loans, ranging from £500 to £10,000, depending on your financial capabilities. Your application could be approved within a day as long as you meet the criteria, and won’t be slowed down by an investigation into your credit history or documentation.
- Low interest – while the APR will be higher than a standard bank loan, guarantor loans generally have much lower interest than other bad credit loans, such as payday loans. The APR is usually around 50%, compared with that of a payday loan, which can be around 400% to 1,000% or more.
- Credit rebuilder –they can be used to help rebuild your bad credit history by allowing you to sort out your finances. Your payment activities will be reported to credit agencies and will show up on your credit file as a standard loan, so you will appear financially capable be able to and demonstrate you’re a responsible borrower by making the arranged repayments on time.
The Bad News
- Finding a guarantor isn’t easy – your loan guarantor must have a good credit history and prove they can repay the loan if you can’t. They must also be a homeowner and not financially linked with you, nor living at your address. It may also be challenging to find someone who believes in your ability to pay the loan back, which may put people off if they think they’re going to be out of pocket.
- Guarantor credit check – these are similar to standard credit checks for bank loans, which means your guarantor’s credit must be good enough for the loan to be approved. While you may feel they fit the guarantor role well, they will be turned down if their credit isn’t up to scratch. They may also need to provide bank statements and other financial details to prove they can afford the loan repayments and make them on time, which they may find invasive.
- Risk to friendship – this kind of arrangement means that if something goes wrong, it isn’t just your finances that could suffer. The relationship you have with your guarantor could be tested if they have to take over your repayments. The guarantor is only freed from making these payments once the loan is paid off in full, which can even make it difficult for them to take out a loan if they need to. All this could put a strain on a friendship.
Make an informed decision
Guarantor loans suit some people and not others. There are a number of other options for short-term loans if you have bad credit – for example Logbook Loans don’t require a credit check either – but remember to investigate how each potential solution affects your individual situation.
As you might of seen from some of my previous posts I am quite into fitness at the moment. I enjoy running and try to attend the gym as much as I possibly can. I also try to eat healthy including the odd bodybuilding supplement to help with my weight training. For those of you who do take any sort of dietary supplements, you will probably already know they aren’t cheap! I just wanted to write a post about how I get the best prices…and hopefully get some tips from you too.
I usually select what I want to buy from recommendations from friends and online reviews. This doesn’t necessarily mean I stick to one website though. Once I know what I want, I use online price match tools like Google shopping to compare prices across all the shops at once. You need to be wary of shipping charges manipulating the rankings but this is often the quickest way to save money on supplements I find.
Sign up for promotion e-mails
Companies like discount supplements, monster supplements and my protein all have monthly/weekly promotional e-shots. If you aren’t fussy on what you use, you can often get a bargain on certain products if you pick your time well.
So what are your tips? Let me know at email@example.com or in the comment section below.
We’re so used to hearing how much our cars depreciate in value, that it’s easy to forget that they can keep their value too. If you own your car or van outright, it’s an asset. While most people are guilty of neglecting their cars even a little bit, if you get into a routine of regular maintenance, it will help it retain its equity.
This is good news if you need to take out a logbook loan or sell it outright, as you’ll be getting the best possible price for your original investment. So here are our recommended basics, from the obvious cleaning and maintenance to creating your own personal ‘minimum distance’ policy.
1. Basic checks can prevent costly damage
Don’t reply on your MOT or annual service to highlight worn parts and fluids that need replacing, like tyres, windscreen wash, wipers, brake pads, oil, coolant and so on. Checking these regularly will keep you safer on the roads and prevent permanent damage that could incur expensive replacement or repair.
2. Your service history is your car’s future
With normal usage, your car will need servicing a minimum of once a year or every 12,000 miles, or every six months if you travel a lot. Each car is different so check your handbook to find out more. If you’re behind in your services, start now to minimise the chance of damage to expensive parts. Remember to always get your service schedule stamped – especially important if you’ve gone to your official dealership. Regular servicing also helps your car run more efficiently, saving you money on every trip.
3. If you value it, clean it
Dirt and bird droppings won’t do your paintwork any good at all, and will also disguise small scratches or stone chips that need attention. You have two options – pay for someone to clean your car or, if you’re being frugal, give yourself a Sunday morning workout and clean it yourself! Consider at least one layer of wax to finish off, which will stop the build up of dirt and keep your car looking youthful into old age.
4. Create a ‘mimimum distance’ policy
Make it a rule that you will only use your car when you can’t walk the distance in a reasonable time. Vehicle mileage is boosted by the small and sometimes unnecessary journeys we make – like a late night chocolate craving or the school run when there’s a bus stop at the end of the street. Lower mileage on the clock could help your car keep its value. Average mileage in the UK currently stands at between 6,700 (petrol cars) and 10,700 (diesel cars).
5. Don’t run on fumes
Oh but this is a contentious issue! Some ‘experts’ insist that it’s perfectly fine if you run your petrol tank right down to the dregs because the filter will catch any lurking sediment. However, others say that a tank should never be less than quarter full to prevent damage to fuel lines and other parts. It might be prudent to err on the side of caution, and keep your tank sloshingly healthy.
6. Be careful where you park
Let’s talk about protecting your paintwork from scratches and scuffs. Beware of narrow parking spaces, which present more risk from people squeezing between cars to get past. Buttons, zips, belt buckles, bag bling and even wedding rings can damage the laquer on your car. Check your paintwork regularly – minor scratches can be polished out, but a deeper gouge will need fixing as soon as possible. Where possible, give everyone ample room when you park up.
7. Enjoy watching the experts do it, but …
On the TV, it’s perfectly fine for a group of enthusiastic petrolheads with skills to turn an ordinary car into a head-turning diva on four wheels. But leave the big ideas for the small screen when it comes to your own car or van, especially if you want to protect its resale value or act as security for a logbook loan. Permanent modifications can kill the market value of your motor and will most likely affect your car insurance premiums too. Don’t do it. Please.
If you need to raise a loan and you think your car has equity that you can release, contact Auto Advance or contact us on 0333 577 7002 and ask about V5 loans.