Finding A Guarantee For A Private Loan
Under some circumstances, a bank, financial institution or other type of loan provider, will require a guarantee before they will approve a private loan amount.
A guarantee can take different forms:
– You can provide an asset as security that will be seized upon late or non-payment of the loan.
– Collateral in a cash amount from a current or future income can be provided to repay the loan.
– A person or entity can provide surety where they will be responsible for repaying the loan in the event that you are unable to do so.
You will be required to provide a guarantee for a private loan if:
– You have a bad credit rating or are blacklisted.
– If the loan amount is in excess of your available income to repay the loan.
– Should you have other loans or debt that could affect your ability to repay the loan.
Who can you approach to provide a guarantee for a personal loan?
– You can approach a friend or family member who is in good financial standing to guarantee the loan amount.
– The government has specific programs that are directed at providing surety for loan amounts. However, these are normally directed at entrepreneurs or small business start-ups.
– You can find a private investor to back your private loan. A private investor may however require evidence that they will receive a return on their investment so the loan amount should be directed at making a profit.
– Angel investors may provide a guarantee for a private loan without requiring a return.
How do you go about providing a guarantee for a personal loan?
– In the event that you are providing an asset as security, you will need to sign a contract that will allow the loan provider to take ownership of your goods in the event of non-payment.
– Should you have a private person or entity to provide surety, they will need to cosign all the relevant loan documents, agreements and contracts. The loan provider may require that the person or a legal representative from the entity be there in person to sign the papers.
What can you do if you cannot find a solution to guarantee the loan amount:
– Fix your credit record. Repay all your debtors who have reported you for late or non-payment of your debt. Once you have repaid the debt, you can ask the relevant credit agencies to amend their records.
– Consolidate your debt. This will mean that all your current debtors will be repaid and that you will only have one debt to repay allowing you to mend your credit rating.
– Request a lower loan amount that will be more affordable to repay.
– Extend the repayment period so that your monthly installments are more affordable.
Always keep in mind that any person signing surety for a private loan on your behalf will do so under the assumption that you will repay the loan. In the event that you are unable to pay, you could sever ties with the guarantor or seriously affect your ability to request a guarantee in the future.