If you haven't heard of guarantor loans by now then you probably haven't shopped around for credit recently. If you have, you'll know that it's harder to get credit now than it was just a couple of years ago. Lenders have tightened their criteria and their lending habits to keep business running and shareholders happy. Guarantor loans are a product that enables the lender to maintain security of getting their investment back whilst still providing a viable loan soultion for the consumer.

The premise behind guarantor loans is that the applicant is required to have someone who can support their application by acting as the financial guarantor. The guarantor simply agrees to step in with loan repayments should the applicant be unable to for one reason or another throughout the duration of the loan agreement. This means lower rates for customers and looser lending criteria for the applicants.

These types of loans have been available for a few years now in the UK and they are increasingly more popular. The popularity of these loan products shows that applicants and their friends have a good degree of trust when it comes to financial matters. In some markets around the world this type of product simply wouldn't work (e.g. where people would feel guilty asking for a friend to assist, perhaps as part of their culture). In the UK, this product seems to be moving from strength to strength and it shows that people are often willing to help friends in times to trouble or need throughout the country.

Other forms of credit don't rely on an additional party for the applicant to get the money they are looking for, however, standard loans are typically very hard to get in today's markets without absolutely impeccable credit linked with absolute proof that you have a secure income and can afford to make the repayments for however long the loan agreement is over. This is also a reason that the payday lending market has increased in value. Payday lending is much less risky for the lender because smaller amounts of money are involved and these are lent over a short span of time, again reducing the risk of getting the money back from the consumer.

Unfortunately the lending markets at the moment are heavily based on risk. Typically the lending arms of a business aren't so much about making large profits, but more about stability and keeping afloat while tough times still exist in the economy. Hopefully this won't continue for much longer, but I believe that guarantor loans will be around for quite a while to come never the less.