Guarantor Personal Loans in Australia

Are you struggling to secure a loan? Loan providers have their criteria, and your loan applications might involve a high risk level. In that case, can a guarantor help supply your application with the needed security? We’ll dissect guarantor personal loans in Australia to help you decide if they’re right for you.

What this article covers:

What Is a Guarantor Personal Loan?

This personal loan has the added party of a guarantor, typically a family member who can help you secure a loan. They have a stronger financial position and higher credit score than you and are willing to complete your loan repayments if you default on the loan, guaranteeing your loan fully or partially.

This loan might be secured, in which case the guarantor offers the lender an asset (home, car, or bike) as collateral. This way, the lender can claim it to cover the loan cost if you’re unable to. If paid in full, the guarantor regains control of their asset.

To illustrate, a guarantor is a backup plan, the original being that you make your loan repayments on time like you’d in a regular personal loan.

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Still, why would you need someone to guarantee a personal loan? For one, you might be in a financial situation where you’re unable to repay the loan on your own.

Otherwise, you might have sufficient finances to secure a loan, but it’s just a smaller amount than you need, or you might want to get the loan at a reduced cost. A personal loan with a guarantor involves less risk for lenders and lower costs for you.

As a category of personal loans, bad credit guarantor loans are designed to cover any personal expenses, such as:

  • Medical or dental expenses
  • Educational fees
  • Emergency expenses
  • Wedding costs
  • Veterinary bills
  • Vehicle purchase
  • Vehicle expenses
  • Travel costs
  • Holiday expenses
  • Home repairs and maintenance
  • Bond, rent, or moving costs
  • Debt consolidation
  • White goods
  • Other purchases

Same-day loans with guarantor typically have terms that range from 3 to 5 years. Their amounts can be as large as $10,000, and you pay them in monthly instalments with interest, charges, and fees.

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Can I Get a Personal Loan with a Guarantor?

To qualify for personal loans with a guarantor, you must meet your lender’s criteria. Although each lender has their requirements, they usually demand that you:

  • Be an Australian citizen or permanent resident
  • Be 18 or older
  • Have a checking account
  • Have a form of employment with a steady monthly income
  • Have equity in the property used to secure the loan (which should be on Australian land)

How Can I Apply?

The application process for personal loans involving guarantors is slightly different from regular application processes. To elaborate, it’s composed of four main steps:

1. Find a Guarantor

Think of a parent, grandparent, sibling, or close relative who has a strong financial position and whom you fully trust. Reach out to them, and ask them for their support. Having chosen a guarantor, you can proceed with the loan application process.

2. Submit the Application

Sit down with your guarantor, and fill out the online application form for a guaranteed approval online loan. Insert your needed loan amount and preferred repayment period manually or using our loan calculator. Then, choose your purpose for getting a loan, and add all the personal information, bank details, and documents needed from you and your guarantor, which include the following:

  • Full name
  • Gender
  • Physical or residential address
  • Qualifications and education
  • Contact details, such as your mobile number, telephone number, and email address
  • Occupation (with pay slips, job history, or other documentation forms)
  • Bank account details
  • Bank statement data for the 90 days before your application
  • Credit requests you’ve made with us
  • Tax returns for the past two years
  • 100-points of identification
  • Evidence of your borrowing history (such as loans and mortgages)

guarantor personal loans

3. Get Matched

Once we receive your loan application, we’ll get to work searching for a loan provider who’d be willing to offer you small loans with guarantor, which could take a few moments. So, we’ll match you with a lender and connect you with them in no time!

4. Sign Your Contract

The lender will consider your financial circumstances and that of your guarantor, such as income, employment information, outstanding debts, spending habits, credit score, and so on. This way, they can determine if the loan is suitable for you or not.

Then, they’ll draft a loan contract, which you can read thoroughly with your guarantor and a financial/legal advisor. If you’re satisfied with its terms, you can sign it, and your loan provider will contact you shortly to agree with you on the method by which you can receive the loan. Lastly, you can expect to get your funds fast (in a day or two)!

What Are the Types of Guarantor Personal Loans in Australia?

Guarantor personal loans in Australia are available in two types:

Secured Loans

If you apply for a secured personal loan, you and your guarantor must provide an asset or property as collateral for the loan. This way, the lender can claim it if you default on the payment to cover the loan cost.

These loans give lenders more security, which makes them willing to offer you bigger loan amounts and lower interest rates. Accordingly, they’re suitable for big loans and individuals with assets they can put forth as collateral. However, they involve high risk for guarantors who may lose their house, car, or else if you can’t pay off your loan.

Unsecured Loans

Unsecured loans are more common. You can access them without the risk of losing your or your guarantor’s asset. Unfortunately, the lack of collateral means a high risk for lenders, so they charge higher rates to compensate for the risk of borrowers not making their repayments.

personal loans with a guarantor australia

Benefits

There are several perks to these loans, including:

High Approval Rates

Having a guarantor adds security to your application, which means lenders are more likely to accept it. These high acceptance loans are suited for applicants with low credit scores and previous financial mishaps.

Maximised Borrowing Power

A guarantor might make you eligible for a bigger loan amount than you’d originally be. So, if you want to make a costly purchase like a car, house, or else, a bad credit personal loan with a guarantor will maximise your borrowing power!

Low Cost

The addition of a guarantor means that they’ll pay off the loan if you can’t, which reduces the risk your lender takes on when they approve your loan. For that reason, they charge you lower interest rates and fees for these loans and offer you better terms than other loans.

Reduced Risk

Typically, you might deal with legal action if you fail to repay a loan or even do jail time. However, having a guarantor means they’ll deal with your loan default and cover the loan. So, there are fewer risks for you if you can’t pay back the loan.

Downsides

You can’t make an informed decision about guarantor personal loans with bad credit in Australia without considering their downsides.

Risk for Your Guarantor

If you’re struggling financially, you might worry that you’ll cause your loved ones to go through financial losses or have a reduced credit score. After all, you’ll have the pressure of meeting your payments if you don’t want your guarantor to pay back the loan on your behalf. Even worse, they’ll lose their property or asset if they’ve offered it as collateral for the loan.

No Control Over Security

You or your guarantor won’t have full control over the asset you choose as security for the duration of your loan repayment period. So, you can’t sell it until the loan is repaid.

personal loan guarantee

Final Verdict

Ultimately, guarantor personal loans in Australia are designed for applicants who don’t have a solid financial standing. By enlisting the help of a trusted close relative, they can get their loan applications approved.

If the borrower is unable to pay off their unsecured loan, these guarantors do so (fully or partially). If it’s secured, they might put forth their asset to cover the cost of the loan or part of it. Guarantor loans aren’t as risky for lenders as other loans, which means a higher borrowing power and lower interest rates for you!

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