Asking someone for help can be an unnerving experience, however, it shouldn’t be. However, based on our experience, the large majority of people will be glad if their family member or a friend approached them for help.
We've put together some information and tips to facilitate your discussion with your prospective guarantor.
When you have the discussion, make sure to do it in person or over the phone so that it’s easier to address any questions or concerns. Transparency and preparation is the key. Based on our survey*, 70% of prospective guarantors are more likely to guarantee a loan if the borrower can demonstrate that they did their homework and this is the best option they qualify for.
First of all, it pays off to be upfront regarding why you need the loan as guarantors are more likely to support the causes they agree with. Most people agree that a guarantor loan is an appropriate solution to handle major or unexpected expenses such as medical bills, car repairs or education-related expenses.
Second, it’s important to demonstrate that you can afford your monthly loan repayments. Your guarantor wants to help, but they don’t want you to get into an obligation you cannot support. We advise using a budget template to account for your monthly inflows and outflows to demonstrate how the loan’s monthly payments would fit into your budget.
And third, make sure your guarantor understands their responsibilities under their personal guarantee agreement. Remember that your Guarantor will have to step in if you cannot make payments on your own. It might also be helpful to mention that the guarantor loan will not affect your Guarantor’s credit score nor their ability to borrow as long as the loan is in good standing.
It’s important to keep the conversation positive and thank them regardless of the outcome. Being a guarantor is a big commitment and not everyone might be in a good position to commit to a guarantor relationship when you approach them. It might take several conversations to find the right person. Good luck!
Notes: * Online survey based on 200 respondents administered by Trustic in May 2021.