If you are thinking about getting a guarantor loan then you will have to decide who to pick to be your guarantor. Some people might have a selection of choices that they could make and others less so. Many people would consider asking their parents as they are possibly more likely to be willing to lend them money and they may have enough money to be able to do it. It can also be less embarrassing to tell your parents that you need financial help and a loan compared with other people. It is a big decision though and there are a number of factors that you should consider before you finally make up your mind about it all.
– Can they afford it? It is worth thinking about whether you think that they will be able to afford to cover the cost of any missed repayments. It is good to look at the terms of the loan and see how much they will have to pay out as there may be additional costs if they have to make the payment rather than you. Think about how that might impact them and whether they will be able to manage if they do have to pay out money. You might feel that you will always manage and they will not have to do this but it is always wise to plan for the worst just in case.
– Do they have a good credit record? In order to be accepted as guarantors they will nee dto have a good credit record. This means that they will need to have a good income and not have too much outstanding debt. They also need to have been keeping up with all of their regular payments and repayments. You may not know whether they have a good credit record or not but it is likely that you will have a good idea.
– Will they be prepared to cover the cost of missed repayments? It is worth thinking about whether you think they will be happy about paying for any missed repayments that you have. You will need them to cover these missed repayments but they might expect you to repay them the money as soon as you can. This could be problematic if you are struggling financially and so you will need to think about whether this is something they will expect or whether they will be willing to cover the cost of them and not expect you to repay them. They might be happy to wait for you to repay them once you have paid off the rest of the loan or when you have some spare money. Make sure that what you think they will want reflects your expectations.
– Will it affect your relationship? It may seem a bit extreme but money can be a big issue in relationships between people including parents and children. Imagine the worst case scenario where you cannot afford to make any of the repayments and how that might affect your relationship with your parents. Might they be disappointed in you or cross with you perhaps? They might even feel disappointed that you have had to ask them for help like this in the first place. Consider whether it is worth any changes to your relationship that might come about.
– Will it make any other family members jealous? This is something that you may not have thought about but jealousy can be a big issue in families particularly between siblings. There are many sets of siblings that feel this and so it is something that you should consider. Will a sibling or other family member feel jealous if you get this help and they do not? Also will this have an impact on your relationship with them?
These are important things to think about even before you approach your parents. Then once you do talk to them it is worth discussing each of these things with them as well. It is especially important to make sure that you come to an agreement about what will happen if they have to make repayments for you. Find out whether they will expect you to repay them and if so when. It can be wise to document this and both have copies of what you agree so that then you cannot argue and fall out about it later. This might seem like a lot of hassle but it is worth going to all of this effort. You do not want to cause problems between you and your parents and so you should only ask them if you are really sure that it will not cause any problems for you. Then you need to be sure that they are really happy with going ahead before you sign anything.