Payday Loans

A guarantor is quite often required for personal loans, particularly those that are unsecured, for significant amounts or being requested by people with poor credit ratings. Essentially it is another way of securing the loan and ensuring that they reduce the risk for lenders. It's standard industry practice for many loans and will only come into force if you start defaulting or are declared bankrupt for any reason.

Payday loans are slightly different to most other personal options, in fact markedly different. They aren't long-term loans and they are ordinarily only for smaller amounts (less than 1,000). Therefore the need for a guarantor is reduced.

However, the risk to lenders is far greater in payday loans, which is why some may require a guarantor. This is extremely rare though, in fact only a few companies currently request one and where they do; it is almost always for particularly specialist circumstances - including instances where the applicant is unemployed.

As already mentioned, this is unusual in the extreme though. Payday loan providers as a rule are generally very careful about who they lend to and usually work hard to ensure that all those who are accepted can easily afford the costs. This is usually determined by the amount that they take home on a monthly basis. Therefore anybody who is unemployed or doesn't earn enough to cover repayments will automatically be declined.

However some companies are willing to take the extra chance on applicants, as long as they are able to provide a valid guarantor. Similar checks will be required on anybody who is named on a policy, if only to ensure that they have the finance themselves and are prepared to cover the risk on somebody else's behalf.

In the most part though, one of the perceived benefits of payday loans is the sheer ease of the whole process. There aren't endless forms to fill in, they are accessible to people who have poor credit history and don't require a guarantor. You can also apply one minute and be accepted the next, it really is that quick.

There are downsides to this kind of quick credit, but only if they are abused or people don't take the time to fully research what they are getting themselves in for. All payday loan providers should provide ample information within their literature or website, so make sure that you check it all through first. Failure to do so could mean that you don't get the best deal or get stung by a shark. Rates of interest are also noticeably higher than most other lending sources. This pushes up costs significantly and is another reason why a fair amount of bad publicity swirls around payday loans.

However, if you effectively way up the risks as well as potential rewards, you can make a decision that will help change your life for the better. However, it is equally possible for you to get yourself into a mountain of debt without any form of obvious escape route. Missing payments or continuously reapplying for loans, with or without a guarantor, will only result in bigger problems somewhere further down the line.

So in the world of quick finance, guarantors aren't a pre-requisite. In fact most simply won't ask you to provide any such details. payday loans are designed with availability and accessibility in mind and therefore this added hurdle is largely unnecessary. The only instances where you might find that a third party may be required is if you are unemployed, however in these circumstances a payday loan may not be the best solution anyway, and they do tend to be few and far between - if available at all.