Why Becoming a Guarantor Can Be Very Rewarding?
1. You can extend financial help to someone who is close to you, even when you don’t have the money. This can help prevent getting into financial difficulties yourself, especially if the amount to be borrowed is particularly high.
2. On the other hand, even if you have the money to lend, having the borrower apply for a guarantor loan will give them a sense of responsibility. There are many times when a borrower tends to take a loan from someone they know very lightly, because these agreements are usually not binding. If you intend to help the borrower develop a sense of responsibility and control over their financial obligations, becoming their guarantor is much better than handing them the money easily.
3. You can help someone with bad credit obtain money on a much less interest rate. They won’t be forced to get into a very expensive payday loan deal or risk their collateral just to obtain the cash they need.
4. A guarantor loan would reflect on the borrower’s credit score. This means that the applicant will be given a chance to improve their credit, which will not be possible if you lend the money directly to them. In short, in becoming someone’s guarantor, you can actually help them rebuild their credit and eliminate the need to seek out your help in the future.