My Guarantor is a Tenant – What Now?

You may have heard a lot about guarantor loans recently, as they've become a very popular way to borrow in the last couple of years. When the recession began in 2008, the banks went into a near-meltdown and stopped lending money. The problem that set off the financial crash was the fact that they had lent out too much to a lot of people who couldn't actually afford to pay it back. Ever since then, many financial institutions have been afraid of lending to people who do not fit into certain strict criteria.

Payday lenders moved in to fill the gap for those who wanted small amounts of quick credit, but as the product was completely new there were not enough regulations in place to control the more unscrupulous lenders. This left a lot of people in trouble when they took out payday loans which they couldn't pay back, so they then took out more payday loans to pay off those ones, and so the cycle continued.

Guarantor loans were borne from the need of lower cost, higher amount loans for people who couldn't get credit from their bank. The more people who have taken on guarantor loans, the more variances guarantor lenders have been able to add into their lending criteria. Nowadays, there’s a lot of choice when it comes to loan term, loan amount and who your guarantor can be. One of the fundamental aspects of getting a guarantor loan has always been that your guarantor must be a homeowner, but you can now get a guarantor loan if your guarantor is a tenant if you know where to look.

A couple of the main guarantor lenders are offering this option, as it helps those who need a loan find a suitable guarantor. Widening the criteria like this has allowed many more people benefit from a guarantor loan rather than having to turn to more risky or expensive means of credit, which is a good thing. However, it’s important to note that a tenant guarantor loan is usually a little more expensive than a homeowner guarantor loan. This is because there is slightly more risk associated with a tenant guarantor as they don’t have their own property. This doesn't mean that the lender sees it as a risk because they can’t repossess the property (they shouldn't do this anyway) in the case of a loan default, it’s simply about stability.

If you’re not sure which lenders offer loans to those with a tenant guarantor, you’ll need to do a bit of digging. The ones who do offer this option are not likely to keep it very hidden, as it’s something to be proud of and which will ultimately get them more customers. Check the homepage and/or FAQ sections of the guarantor lender’s website that you feel most comfortable with as a company. Their tenant guarantor option should be clearly labelled, but if it isn't then it doesn't hurt to ask them directly.