According to research, 5% of the world’s population control 95% of the world’s wealth. Incidentally, 95% of our population control 5% of the world’s wealth. Imagine billions of people trying to get their share off a tiny piece of financial pie. Being part of the working class is not easy as every day, we work hard for the things that we want and need. If you are part of the middle class, then you understand that money does not come easy. With many economic problems experienced worldwide, it seems more challenging than ever to budget. Nevertheless, the answer is not in being frugal, it is in money management. From time to time, you might need a loan or two. But if you are careful with your finances, you can easily pay off your loans in no time.
Speaking of loans, there is one common loan that many people apply for which you can do, too. This is called guaranteed loans. From the name itself, you will have a guarantor in case you are not able to pay. Your guarantor may be a third party individual, which is common; or the government.
The process of a guaranteed loan is quite simple. Say, your loan is covered by a government entity; this organization will take the responsibility to repay your loan in case you are not capable to do so later on. What happens is that the agency purchases the loan from the lending company. Afterwards, they draw a new contract on how the guaranteed loan is repaid. The government agency can act as a middleman as it collects payments from the debtor while making payments to the lending company. There are also instances that the agency purchases the whole amount of loan by giving a lump sum payment. The government does not just purchase any loan. It has requirements to screen the different lending companies.
If a third party individual commits to be part of your guaranteed loan, the concept is similar with that of a government agency. The individual should provide the necessary papers with his signature. The documents should state that in the event of you not being able to pay the loan, the individual will take over. There are policies that the third party individual should take note of.
As the borrower, there are responsibilities that you must know and understand. There are requirements needed of you like documents on your credit status, salary or income source, etc. The good thing about a guaranteed loan is that there are some companies that offer this even if you have bad credit. You will still get the money that you need. Depending on the country or state that you are in, there is a variation in the laws that govern guaranteed loans. So if you are to search the internet for lending companies, make sure to stick with those that are in your locality. This will save you a lot of time and effort. Don’t forget to carefully study the company’s background along with its services.