If you are looking for a guarantor to help you out with a loan, then you may wonder who is the best person to pick. You may be lucky enough to find that you have a friend who has a good credit rating and that is likely to be willing to help you. But should you pick them?
When you are discussing them helping you with a payday loan then it is really important to have clear arrangements. You will need to discuss together what might happen if they do have to make a repayment for you. It can be easy to just assume that there will be no need to worry about this and that you will never miss a repayment so you will not need to think about it. However, it is always good to chat to them about the possibility of it happening. Make sure that they are clear on your expectations. It might be that you feel that if you miss a repayment and they pay it then that is how it should be as that is what they agreed to. Alternatively, you might feel that if they do have to make a repayment that you will repay them. You might want to set out how and when you will repay them or you might want to leave it a bit more open so you can just do it when you can afford to.
How will they feel if they have to pay?
It is worth trying to find out how they will feel if they have to make a repayment. Ask them whether they will feel annoyed or sad or whether they will be okay with it. Also ask whether they will financially feel okay having to do that and whether they will expect you to repay them as soon as possible or even if they want a formal arrangement drawn up. It might be best, to help to preserve your relationship if you have an agreement in writing about what will happen if they do have to make a repayment and then you will be able to know exactly where you both stand. If they feel that they will struggle financially if they do have to make repayments then it could be worth thinking about whether it is a good idea to go ahead.
Will it damage your relationship?
It is good to also think about what impact it may have on your behaviour. Helping friends out will usually cement a relationship further but if you do not make some or all of the repayments then it might put some strain on the relationship. If they get short of money and need you to repay them but you cannot, then it could cause big problems between you. If you are close friends then things may work out fine, but it is worth thinking about it and taking together about it first. Make sure that you are both confident that it will work out well for both of you.
Will it affect relationships with others?
It is also worth thinking about whether it might have an impact on your relationships with other people. If they find out about the arrangement they may feel jealous that you have been helped by that friend and it could stop them feeling as close to you. They may also wonder whey you did not ask them for help perhaps and they may feel offended about that. It can be tricky and it is worth thinking carefully about. You may just assume that if you do not mention the arrangement things will not change, but you never know whether it might slip out or if your guarantor will choose to tell someone. As you can see, there could be potential problems with choosing a friend as a guarantor. However, these risks are probably pretty much the same if you chose a family member as well. With family we often have a closer bond and so that could mean that they will be more understanding if you miss a repayment but if you do see your relationship break down it could be a more precious one to lose if it is a family member. It might also impact your relationships with other family members too. This might not just make it difficult for you but it could be awkward at family occasions as well. It is a really big decision and well worth thinking over and discussing with a few people first. Even if you are completely confident that you will be able to make all of the repayments, there is always a risk that you may struggle for some reason, perhaps if unexpected expenses come along, if you are ill and cannot work or have to look after a loved one, so it is wise to be prepared for the unexpected.