Guarantee Personal Loan: Your Ultimate Guide

Do you need help with obtaining loans because of poor credit? Do you have no prior credit history and are a first-time borrower? Or do you need a loan greater than you are now eligible for? 

A guarantor loan can be just what you need if you answer yes to these questions.

We’ll discuss a guarantee personal loan, who may be a guarantor, the advantages and disadvantages of this kind of loan, and how to apply for one in this comprehensive guide.

What this article covers:

What Is a Guaranteed Personal Loan?

A guaranteed personal loan, sometimes called a guarantor loan, is a loan that needs a third party to secure it if the borrower defaults. 

This person can be a family member or friend. The guarantor must be able to show they can repay the loan if the borrower cannot do so and must have a strong credit history.

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Who May Serve as a Personal Loan Guarantor for Online Guaranteed Loans?

Guarantors must be above 18 years old, have a clean credit history, and be Australian citizens or permanent residents. They also may have to provide evidence of their assets and income. 

Remember that different lenders may offer different terms, but the above rules apply to virtually any loan regardless of the lenders.

Benefits of Guaranteed Approval Loans Online

Let’s examine the benefits of obtaining a personal loan with a guarantee online:

  • Greater Loan Amounts Available 

One of the key advantages is that you may access greater loan amounts than you’d normally be qualified for. Obtaining larger amounts may be especially beneficial if you must finance expensive affairs.

  • Boosting Your Credit Score 

You may raise your credit score by repaying your guaranteed personal loan on time. A guaranteed loan might be helpful if you have low credit or no credit history, eventually making you eligible for better loans.

  • Simple and Effective Approval

Guaranteed loans are often more straightforward than standard ones because lenders are more likely to lend to customers with a guarantor to back their loans. Online guarantor loans are high-acceptance loans, and they’re accommodating for applicants with a history of loan denials owing to their credit history.

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Potential Drawbacks of 100-Percent Approval Loans

You should also consider some reasons why guaranteed personal loans may not be the best choice:

  • Expenses Placed on the Guarantor

One of its major disadvantages is that a guaranteed loan entails a significant financial strain on the guarantor. The guarantor is liable for the unpaid sum if the borrower fails on the loan, which might put a severe financial burden on them.

  • It Can Create Tension 

The relationship between you and your guarantor can turn into a sour affair. Not being able to repay the loan means that your guarantor will have to cover everything, which can cause potential conflicts. 

  • High-Interest Rates 

Since lenders see guaranteed personal loans as carrying a more considerable risk than conventional loans, they could have higher interest rates. Lenders might expect you to pay more interest throughout the loan, making it harder to repay and causing an eventual debt cycle. 

How Do I Apply for a 100 Percent Guaranteed Loan? 

Although applying for this loan isn’t difficult, there are a few things you shouldn’t skip if you want quick approval:

  • Research Lenders

Researching lenders that provide this kind of loan is the first step. You can do this online by going to lender websites, such as Orange Loans, or using comparison websites that let you look at loan offers from several lenders side by side.

  • Find a Guarantor

You must find a guarantor prepared to support your loan as part of the application procedure. A guarantor should be a person with a solid credit history who is prepared and able to make repayments if you cannot. Keep in mind some lenders might offer a loan with a guarantor no credit check.

  • Provide Guarantor Details

After you’ve chosen a guarantor, you must include their details in your loan application. Guarantor details typically contain the person’s name, residence, birth date, and financial information, including income, outgoings, and unpaid debts. If you do this process online, you can get guaranteed loan approval online within hours, while you can count on some lenders to approve guarantor loans the same day.

  • Read the Terms of the Agreement and Sign the Contract 

Once the lender approves your application, you must sign a loan agreement specifying these terms and conditions. Terms and conditions include information on the loan’s terms, fees, interest rate, and payback timeline, among other things.

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Bad Credit Loans Guaranteed Approval Direct Lenders in Australia – Is It Possible?

Yes, even with bad credit, you may still qualify for a guaranteed personal loan in Australia. However, finding a lender that would give you a loan may be more challenging, and the interest rates may be higher than they’d be for consumers with solid credit.

Even if your credit score is poor, having a guarantor with a strong credit history might boost your chances of getting a loan. When evaluating a loan application, the lender will consider both the borrower’s and the guarantor’s credit histories; thus, having a guarantee with a high credit score may assist in reducing the risk of lending to someone with terrible credit.

You may need to research to locate a lender ready to deal with you since not all lenders will give these types of loans to clients with poor credit. You should offer extra supporting papers and information about your financial condition.

Australia’s Private Lender Options for Obtaining a Guaranteed Personal Loan

If you’d like to avoid working with traditional lenders, you might want to look into some private lender alternatives:

Peer-to-Peer Lenders

Peer-to-peer lending sites link borrowers with investors prepared to finance their loans. These lenders often provide personal loans with guaranteed approval at cheaper interest rates than conventional lenders, and they could be more accommodating to customers with poor credit. 

Microfinance Organisations

These organisations are an excellent choice for small loans for individuals that can’t access bank loans. These loans come with little to zero interest, and the profit microfinance organisations make from your loan is minimal. Their only con is that you must conduct thorough research, and the waiting lists might be longer.

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Are Guaranteed Loans Offered by Private Lenders Better Than Those by Traditional Banks?

Whether private lenders are superior to conventional banks for securing personal loans depends on each borrower’s unique demands and circumstances. There’re several things to note, such as:

  • Poor Credit History: Private lenders may have more lenient lending requirements than commercial banks for customers with poor credit or no credit history. They could also provide more individualised service and quicker approval timeframes.
  • Costs: The loan cost may be greater if private lenders charge higher interest rates and fees than conventional banks. They could also be subject to looser rules and control than traditional banks, which puts borrowers at risk.
  • Stability: Traditional banks may provide a more stable financial standing, reputable options, and cheaper interest rates and fees than private lenders. They could also offer more financial services and goods than private lenders, which is advantageous for borrowers who want various banking services. 

Can I Use an Online Guarantor Loan to Consolidate Debt? 

Yes, you can consolidate debt with this loan. If you’d like to simplify managing and repaying debt, you’ll look for a way to merge your bad loans into one with a single, reduced interest rate.

Lenders are more likely to grant these loans for debt consolidation. They may provide more favourable conditions, including lower interest rates, longer payback terms, and greater loan amounts because the loan comes with collateral. 

If you have high-interest debts like credit card debt or payday loans, using a guaranteed personal loan to consolidate it is the wisest financial decision you can make.

However, dangers are involved in taking out a guaranteed personal loan to consolidate debt. If you fail to repay the loan effectively, the lender can take possession of any collateral you used to secure the loan, such as a savings account or car. 

You may also risk accruing extra debt if you get a loan to cover credit card debt but then keep making the same decisions that got you in trouble in the first place. 

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Wrapping Up

Guarantor personal loans in Australia may be an excellent alternative for borrowers who wouldn’t otherwise be able to get a loan, such as those with terrible credit or no credit history. 

However, they may have disadvantages, including putting a heavy weight on the guarantor and having higher interest rates than standard loans.

Individual requirements and circumstances ultimately determine whether private lenders or conventional banks are better suited to guarantee personal loans.

Consider the advantages and disadvantages of a guaranteed personal loan, evaluate your financial status, and choose a lender wisely if you’re considering getting one. With careful thought and study, you may get the money you need to reach your financial objectives.

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