People take loans to satisfy their economic needs both for day to day requirements and for their luxury desires. It is acceptable to take on the liability of a loan or satisfying their expenses by using a credit card, which is another type of loan. When an individual takes a loan and then he is not able to repay it, then they will have to apply for a loan with guarantor that supports him to repay the previous loans.
•A guarantor loan is very useful as the interest rate charged on it is reasonable as compared to other loans. However, having a low interest rate does not absolve one of the debts and the previous loan should be repaid.
•If an individual cannot repay the Consolidated Debt Loan that he received to cover his older loans, then he will find his credit rating diminished.
•The Credit Score is related to one’s reputation and his worthiness. A person having a bad credit rating destroyed people’s perception of him.
•When he is not able to repay his loan, he will lose his reputation for reliability and he would not get a regular loan; however, he could get a loan with a guarantor.
•Once a person has a poor credit rating due to his inability to repay his loans he would not be able to get any further loans due to his poor reputation, but he can avail this option.
Reducing Pointless Expenditure:
In the above case, it is suggested that an individual should decrease his unnecessary expenses. He should use his guarantor loan only for those things that are required to meet his basic needs and the money saved can be used to repay his debts.
Debt and Income Comparison:
It is vital that people understand both their income and the amount of debt they have. This means that he can easily calculate how much extra income he has to try and repay the loans and restore his poor credit rating.
Paying High EMI:
An EMI is considered one’s monthly repayments. Once a person only purchases his basic needs and stops any unnecessary or wasteful expenditure, he can take the extra money saved and he can pay a higher EMI total per month resulting in an overall reduction in the amount of interest he will pay over the course of the loan.
Getting Guarantor Loan:
When a person is unable to get any other type of loan to repay the debts or to fulfil the basic needs, it is better to consider a guarantor loan to raise the required capital to cover the debt and recover his credit rating.