Published on July 17th, 2015 | by FinanceLoophole0
Guarantor Loan Warning Issued By CAB
Guarantor Loan Warning issued by CAB
The Citizens Advice Bureau has issued a warning to anyone that is considering acting as a guarantor for someone looking for a loan from a guarantor loan company that they could be saddling themself with a mountain of debt. The charity says that guarantor loans are as financially burdensome as a payday loan with high interest rates and penalty fees for late payment.
Those signing up to act as guarantors are often unaware of what the agreement is that they are entering into regarding their financial responsibility to pay the debt if the borrow defaults.
A typical guarantor loan is for sums around £1000 at a rate close to 50% with the guarantor providing the backing which enables anyone with a poor credit rating to borrow money they would not normally have access to.
But many don’t understand that they can be liable for all of the loan plus arrears if the borrower gets into trouble – even if some cases if the borrow dies. lenders don’t need to run the same affordability checks on guarantors as they do on borrowers – affordability checks are often conducted briefly over the phone.
The loans watchdog FCA said;
It will be clamping down on guarantor loan companies as it did with payday loan companies.
Previous FCA tightening of the rules on payday loan companies explains why business for guarantor loan companies is on the up.
The CAB said that the FCA should force loan companies to give guarantors for loans clear warnings
- send a physical notice of the agreement the guarantor is entering into
- provide a cooling off period during which they can withdraw
- put a liability warning on all of their marketing material
- direct their borrowers to free independent debt advice if they have fallen into debt
As a borrower the last thing you’d want is to fall behind with the payments and have the loan company call-in the debt with your guarantor. That’s a quick way to ruin friendships and cause family fall-outs. If you are struggling with guarantor loan repayments (and probably with other debt too) I recommend you do seek advice – there’s a guide on this site here.
Many don’t even know who the guarantor loan companies are – to help you we have listed the top guarantor loan companies to avoid below.
- Amigo Guarantor Loan
- Buddy Guarantor Loan
- Solution Guarantor Loan
- Trust Two Guarantor Loan
- Suco Guarantor Loan
- TFS Loans Guarantor Loan
- Guarantor My Loan Guarantor Loan
- Trusttwo Guarantor Loan
- UK Trust Loans Guarantor Loan
- UK Credit Home Owner Guarantor Loan
- Glo Guarantor Loan
- Bamboo Guarantor Loan
- UK Credit Tenant Guarantor Loan
- 1Plus1 Loans Guarantor Loan
- eMoneyUnion Guarantor Loan
- LendFair Ltd Guarantor Loan
- George Banco Guarantor Loan
- Consollo Guarantor Loan