Unsecured guarantor loans provide a path for borrowers with limited or poor credit histories. However, to qualify, you’ll need to find a guarantor to back the loan. In this post, we’ll explain what these loans are, so you can fully understand this loan program.
What Is an Unsecured Loan?To understand this type of financing, we need to explain what an unsecured loan is. Every loan, whether it be a personal loan or business loan, is either secured or unsecured. A secured loan is one that requires collateral, which can be just about anything of value, including:
What Does Guarantor Mean?A guarantor is someone who supports a borrower and agrees to be financially liable in the event of nonpayment. This individual can be a partner, friend, or family member. Your business or someone else’s could also be considered a guarantor. Guarantors must meet the following criteria:
- Have strong credit
- Financial stability
- Be at least 21 years old
Putting It All Together: How to Guarantor Loans Work?Essentially, an unsecured loan is a type of loan that:
- Isn’t secured by collateral.
- Has been guaranteed by someone with financial stability.