History of Guarantor Loans

In 2005 after several years selling promises of unsecured loans to people James Benemor founded FLM Loans as his vehicle to take his brand new unsecured loan known as guarantor loans to market. Guarantor loans were created out of the frustration of seeing a market with no possible product. Subprime borrowers had largely been ignored and if you had bad credit or were out of work the only alternatives were excessively high cost doorstep loans or payday loans which had not yet taken off in the UK.

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FLM Loans became synonymous with guarantor loans and while the concept was not something new to the rest of the world and mortgages in the UK it was certainly new to the unsecured market. Of all the unsecured loans available to the people of the UK guarantor loans are often the cheapest alternative for people with bad credit or out of work.

The reason guarantor loans work is simply because they contain a relatively high level security to the lenders and this allows them to charge you lower rates of interest for bad credit loans. The security is not a traditional asset like a home or a car but rather another person who has good credit, owns a home and is typically between 23 and 70. The concept means that the borrower is not means tested with a credit check neither does their situation affect their approval in anyway. These loans are often called tenant loans or an unemployed loans because it just does not matter one jot what the borrowers situation is, a guarantor loan is foundered on trust.

If an individual trusts the borrower enough to act as the guarantor for it (and therefore take responsibility for it) then that is a good example for the guarantor loan lender. Not only does it buck the trend of recent times with banks radically increasing their lending criteria it crushes the idea that unemployed people and people with bad credit cannot get loans. Not only can they do it but they can use the guarantor loans as a vehicle for breaking the bad credit cycle. By just getting the loan and repaying it on time and in full every month the borrower can repair his credit rating where previously he was stuck unable to find the credit he needed to prove to the banks they were back on track and a responsible borrower.

Today guarantor loans are often one of the first ports of call for people with bad credit looking for unsecured loans. While it is not easy to find a guarantor it's a lot easier and cheaper than most of the bad credit loans alternatives, particularly the payday lenders who often charge APR's well more than 10 times more. So they are cheaper, they allow people to help their friend or loved one and they give people access to credit that otherwise may not otherwise have the ability to. It is no surprise that the UK's awareness of them has over doubled in the last 12 months.

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