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Do I need a guarantor for a private loan?

Looking for a private loan | Financial Information | Tiger Finance

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If you’ve been applying for personal loans and have been rejected, there is another option. Having a guarantor on your loan contract may help your chances of approval, especially if your guarantor has a good credit history. However, you might be wondering if a guarantor is necessary for a private loan. 

A guarantor is someone trusted who will agree to accept financial responsibility for your loan if you cannot meet your repayments. In order to be approved for a loan, your potential guarantor will need to demonstrate to the lender they have the capacity to meet your loan repayments if you can’t.

Read on below to find out if a guarantor is necessary for a private loan. 

What is a private loan?

A private loan is a line of funding that comes from private lenders, instead of traditional lenders such as banks.  Private lending may offer more options in terms of easier approval, quicker processing times and less need for a good credit score. Private lending may be a good option if you are finding the traditional forms of lending criteria too strict, or too hard to meet.

Is a guarantor necessary for a private loan?

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If you’ve found that you might not meet the eligibility criteria to get approved for a personal loan, you might consider asking someone you trust to act as guarantor for the loan.

When you submit an application for a personal loan, your lender will generally determine your eligibility based on factors such as your credit history, your current income, and any debts in your name.

If you find yourself not being able to meet the lending criteria for a personal loan, you might be able to improve your chances of being approved by having someone act as a guarantor for your loan. Generally, guarantors aren’t needed for standard personal loans unless you find yourself having trouble being approved, or unless you are applying for a large loan amount. Guarantors aren’t strictly necessary for private loans, but sometimes they can prove helpful. 

Speaking to your lender about whether or not a guarantor is right for you could be a good idea, as they will be able to give you the best advice on the matter.

What’s the difference between a guarantor loan and a regular loan?

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Using a guarantor is an optional feature that applicants can take advantage of when they cannot meet the eligibility criteria for a loan. If you do choose to have a guarantor on your loan, you might qualify for:

  • A secured loan – If your guarantor has an asset that they are willing to use as collateral, you might be able to apply for a secured personal loan. You may be able to qualify for a more competitive interest rate as a secured loan is less risky for your lender.

 

  • An unsecured loan – You may be able to get more flexibility repayment wise with an unsecured personal loan, and generally, no asset needs to be used as collateral.

What will I need to apply?

When you’re applying for a private loan, you may be asked to provide documents such as:

  • Personal information – Most lenders will need you to provide documentation that proves your identity, such as a passport, driver’s licence or birth certificate.
  • Employment information – Generally, this needs to be evidence of your current salary or wage, plus any extra income you may be receiving. Your lender may also need to see other proof of income such as your most recent payslips or tax returns.
  • Financial information – Your lender may ask for proof of your financial situation. This may include whether you own your home or rent, and proof of your assets and expenses. Your lender may also ask you to provide proof of any savings with other banks if you have any.
  • Any other debts in your name- Your lender may also want to know about any other debts you have. This may mean providing any other credit card or loan statements that you have.

Before you begin your application, it is always a good idea to double-check with your lender to find out exactly what you need to apply.  Every lender is different, and every application process may vary depending on your lender.

Where does Tiger Finance come in?

With Tiger Finance, we can help to get you a loan in four easy steps. You will have a free consultation with one of our specialists, and we will tailor-make you a loan. We will negotiate with lenders on your behalf before you are approved.

We have helped countless Australians get approved for private funding. We understand that lending criteria from other lenders are too strict, and can stop you from achieving your goals. That is wrong, and it should not hold you back.

How we can help

Our finance specialists can help you find the right loan for your lifestyle. If you are one of the many Australians finding getting a business loan difficult, Tiger Finance can make the process simple and pain-free. Call our specialist team for your free initial consultation today!

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