Securing a Buddy Loan can provide instant cash without the burden of exorbitant interest rates and short repayment terms commonly associated with payday loans. As an attractive alternative, Buddy Loans has gained popularity in the UK. This guarantor loans company offers individuals the opportunity to borrow between £1,000 and £10,000, with repayment periods ranging from one to five years, as long as they have a trusted guarantor.
Guarantor loans have emerged as a lifeline for those with a poor credit history or previous loan defaults, as they may be unable to obtain financing from traditional banks or financial institutions. Buddy Loans considers applications even from individuals who have faced county court judgments (CCJs) for their debts, recognizing that such circumstances can significantly impact credit ratings. These loans allow borrowers to receive funds on the same day of application, similar to payday loans. Furthermore, there are no limitations on the purpose of the loan, as Buddy Loans refers to them as “any-purpose loans.”
One notable advantage of a Buddy Loan is its potential to improve the borrower’s credit history. By making regular repayments and avoiding defaults, borrowers with a tarnished credit record can rebuild their credit score, which holds significance for future financial endeavours such as mortgage applications.
Understanding Buddy Loans and the Role of a Guarantor
Unlike traditional loans that heavily rely on credit history, Buddy Loans bases loan approval more on trust than previous financial track records. To obtain a Buddy Loan, applicants must select a guarantor who knows and trusts them, and whom Buddy Loans can also trust.
Prospective guarantors assess the borrower’s need for the loan, potential risks to their financial situation, and their ability to repay. Guarantors would not commit to guaranteeing a loan unless they are confident about the borrower’s financial need and repayment capacity. Therefore, borrowers must choose their guarantor wisely, ensuring they comprehend the responsibilities involved.
Eligible individuals to act as loan guarantors include not only friends but also family members or colleagues. Ideally, the guarantor should possess insight into the borrower’s financial affairs or have had recent discussions about the borrower’s loan attempts that were unsuccessful due to their credit history.
Maintaining a Good Relationship with Buddy Loans in Difficult Times
Buddy Loans acknowledges that most borrowers repay their loans without complications. However, in the event of a missed payment, Buddy Loans contacts the guarantor, as they share the lending risk. Legal action may ensue if neither the borrower nor the guarantor can fulfil the repayment obligations. To avoid such scenarios, it is crucial to communicate openly and promptly with Buddy Loans and your guarantor when encountering difficulties.
Buddy Loans handles cases of financial hardship on an individual basis. Depending on the loan type, borrowers may be eligible for a payment holiday if they experience a temporary reduction in income, such as during furlough, a downturn in self-employed business, or a decrease in benefits. During a payment holiday, interest continues to accrue, leading to longer loan terms and potentially increased repayment amounts. Notably, payment holidays do not impact credit scores, as Buddy Loans does not report them to credit reference agencies.
If borrowers find it challenging to resume repayments after a payment holiday, Buddy Loans conducts a comprehensive assessment of their financial situation. Unless borrowers have already undergone an income and expenditure assessment through a debt management company or other financial service provider, Buddy Loans typically request details of their current earnings and expenditures. This thorough evaluation may reveal previously unnoticed opportunities to reduce unnecessary expenses and redirect funds toward loan repayments.
Settling a Buddy Loan Early and Seeking Assistance
While many lenders impose penalties for early loan repayment, Buddy Loans does not charge fees for settling loans ahead of schedule. Borrowers who find themselves nearing the end of their repayment period and have surplus disposable income can save money on interest fees by paying off the remaining loan amount early. This provides borrowers with the flexibility to become debt-free sooner and save on overall interest expenses.
However, in situations where upcoming repayments become unmanageable, it’s essential not to panic or stress unnecessarily. Dealing with financial difficulties can strain relationships and impact overall well-being. If borrowers anticipate challenges in repaying their loans, it’s crucial to reach out to Buddy Loans promptly and initiate a conversation.
By openly discussing the problem and seeking assistance, borrowers demonstrate their commitment to resolving the issue. Buddy Loans appreciates borrowers who are proactive in addressing their financial situation rather than avoiding the problem. This approach safeguards the loan and mitigates potential risks, benefiting both the borrower’s credit history and their relationship with Buddy Loans.
It’s important to remember that financial hardships can affect anyone, and Buddy Loans understands this. Their team is dedicated to working closely with borrowers to find suitable solutions. By maintaining open lines of communication, borrowers and Buddy Loans can collaborate on developing a repayment plan that aligns with the borrower’s current financial circumstances.
In cases where borrowers successfully navigate through their repayment challenges and settle their loans, Buddy Loans provides support and guidance to help borrowers regain control of their finances. Moreover, borrowers can seek expert advice from organizations such as Debt Movement, which specializes in assisting individuals in managing and overcoming debt. These professionals can provide valuable insights and strategies for achieving debt relief and financial stability.
Buddy Loans offers a viable solution for individuals facing financial difficulties and seeking alternative borrowing options. By choosing a trustworthy guarantor and maintaining open communication with Buddy Loans, borrowers can navigate challenges effectively and maintain a positive relationship with both their lender and their guarantor. Remember, it’s important not to overcommit yourself. Seeking assistance and taking proactive steps towards resolving financial issues are key to overcoming obstacles and regaining control over your financial future.
At Debt Movement we provide professional debt guidance and solutions that help you move out of debt. We offer non-judgemental financial guidance to relieve the burden of financial strain and offer support on your journey to financial freedom. Request a free call back today.
