Guarantor Loans in Nigeria are aimed at customers with a less than perfect credit history.
A Guarantor Loan is a form of unsecured loan where the customer receives the money and makes the payments; however unlike a normal unsecured loan, the customer must provide a guarantor who will make the repayments in the event the customer is unable to.
A Guarantor is a person who promises to make the repayments in the event that the main borrower is unable to. A Guarantor is usually someone with a good credit history who is able to afford the loan payments and is usually (but not always) a homeowner. Lenders normally expect Guarantors to be homeowners; however loans are not secured against the Guarantor’s home.
It is important to note that if you are thinking of becoming a Guarantor please make sure that you can afford the monthly payments if the main borrower cannot. All Guarantors will be expected to make payments on the loan if the main applicant (the borrower with the bad credit) ever fails to make their payments on time. If the circumstances of the main borrower ever change and they can no longer afford to repay the loan, then the Guarantor will become liable for the full balance and regular payments. Guarantors should seek independent legal advice before agreeing to become a guarantor.
Due to the increasing popularity of Guarantor Loans, the industry has seen the rise in Guarantor Loan Brokers. It is important to note that Guarantor Loan Brokers are not the lender and will often charge fees to put customers in touch with lenders.