If you’re repaying multiple debts and finding it difficult to stay on top of them all, or simply looking for a more manageable way to repay, a debt consolidation loan could help.
By combining your debts into a single monthly repayment, there’s only one thing to keep track of—giving you some additional peace of mind.
Of course, taking out a debt consolidation loan means applying for additional credit, which can be tough if you’ve got multiple existing debts or your credit score has taken a hit. This is where guarantors come in.
In this guide, we’ll explore what guarantors are, how they work when consolidating debts, and how you can check whether you need a guarantor.
What is a debt consolidation loan?
Debt consolidation loans enable you to repay existing debts and replace them with a single new debt. They’re often used to combine multiple debts into single monthly repayment, which can be easier to manage and repay.
By consolidating, you may extend the term of your debt and increase the total amount you repay.
What is a guarantor and why would you need one?
Whenever you borrow money, lenders will check your credit report to understand your credit history and assess how reliable you are when it comes to repaying debts.
A high credit rating will give them the confidence to approve your loan, but a lower credit rating may make them feel uneasy about parting with their cash.
In these cases, some lenders will allow a guarantor to be included in the loan agreement. This is an individual who will provide additional security by being jointly responsible for any debt you are unable to repay.
Your guarantor can’t have any financial links to you, which usually rules out partners or spouses but can be a friend or family member.
Are there advantages to having a guarantor?
It’s worth bearing in mind that, even though you may not initially be considering a guarantor loan, it may give you access to a more favourable rate, saving you money.
Also, if you keep up with your credit repayments, you may find your credit score has gradually improved enough to make you eligible for a personal loan. You could then use an unsecured debt consolidation loan to pay off your original loan and take on your finance independently from your guarantor.
It’s therefore worth checking if your chosen lender applies any early repayment fees, if this is something that appeals to you.
What is the benefit of having no guarantor?
Ultimately, it’s all down to personal preferences and circumstances. However, there are a few reasons why a person may want to borrow without a guarantor:
- Financial independence—some people would prefer to not need a friend or relative to be linked to their finances.
- Credit impact—for guarantors, it can be harmful to their credit score, if the borrower does not make repayments on time.
More options—if a guarantor is required, the pool of lenders available will be smaller, so you have more options for borrowing if a guarantor isn’t required.
So, can you get a debt consolidation loan with no guarantor?
It’s common to take out a loan without a guarantor, if the lender feels you are eligible to borrow independently based on your income and credit history, amongst other factors.
Of course, there can be benefits to having a guarantor, including the possibility of being offered a more favourable rate, saving you money. It can also help to improve your credit score, putting you in a stronger position for future borrowing.
How to find a debt consolidation loan with no guarantor
To find a debt consolidation loan that won’t require a guarantor, simply follow these steps.
Step 1: Tell us about your circumstances
Head over to our free eligibility checker and enter a few details about yourself, your circumstances, and the amount you’re looking to borrow.
Step 2: Check your eligibility with a soft search
We’ll then run a soft search on your credit report, meaning it won’t appear in your credit history.
By doing this, we’re able to find lenders that are a good match for your circumstances and are more likely to approve your application without needing you to provide a guarantor.
Step 3: Explore your debt consolidation options
It’s then up to you to browse the list of lenders and find one that feels right for you.
Once you’re ready to proceed, it’s simply a case of clicking “Apply” and we’ll submit your debt consolidation loan application to the chosen lender.
How to find guarantor loans with unique benefits
If you find you will need a guarantor to take out a debt consolidation loan, there are a number of exciting options out there with some unique benefits to consider:
- Rewarding consistent repayment—a lot of guarantor loan lenders also reward you for consistently repaying your loan. For example, Reward Rate drops their rates for consistent repayments.
- Rewarding guarantors—Guarantor My Loan gives the guarantor a month’s payment back as a thank you for being a guarantor.
- Joint loans—some lenders, such as Share My Loan, offer a joint loan option that may be a compelling alternative to a guarantor.
Things to keep in mind when borrowing with a guarantor
Before you accept a debt consolidation loan offer, it’s worth keeping a few things in mind that will help you to make the most of borrowing with a guarantor.
- Trust is important—it is a good idea to choose a guarantor that you trust, and equally someone that trusts you to repay the money as scheduled.
- Keep communication open—it’s important to keep your guarantor informed of how things are progressing and give them some peace of mind. If you feel like you might have trouble making a repayment, talk to them and get their thoughts, as it can impact their credit score too.
- Stay on track—a guarantor loan can be an excellent way to build up your credit rating and lift yourself out of a period of poor credit, so if you take advantage of the opportunity, always repay on time.
Find a debt consolidation loan today
Ready to get started?
Head to our free loan eligibility checker to start your search and find a debt consolidation loan to suit your needs.