The word fate has a lot of different meanings for all of us. Some think that it is so powerful that it holds the ability to set the future events of our lives in a prearranged path as it may deem fit. To substantiate it, people often quote many scenarios in their lives that were the doing of fate and no one else’s. These could be:
the sudden failure of the corrupt police officer’s kidneys;
the unexpected profits of a company that was not earning a penny for months;
or a change in the government policies to provide more benefits for the subsistence of the unemployed.
This is one side of the thinking spectrum, there is a different side to it as well, which says all these are mere coincidences. Fate is nothing but man’s creation to justify the things that are beyond his control. I also support this school of thought. Whatever happens to us is our doing, since what you sow is what you reap. There is no outside force that is responsible for your future.
It is right in your personal and financial situation. Any misgivings in these arenas are not a third party’s fault. Even if it is, then the reason would be you again. You must have given them the power and the tools to decide your future, and they did. It being favourable or not is not something you could blame anyone for.
Setting the personal aside, let us focus on the financial aspects of our lives. All of us are familiar with the term loans. It is an agreement signed between a lender and a borrower. It is done to get a fixed amount of money to be repaid in a prearranged period in lieu of a predefined interest. A familiarity of loans would mean that most of us have procured one.
The procurement of loans usually entails a lot of procedures, documentation, verifications and the need for a guarantor. I feel that all the aspects are acceptable but one. A guarantor, why does this person get to decide whether I am fit for a loan or not?
WHAT IS A GUARANTOR?
For a lender, a guarantor is a person who provides an assurance to him for the loan repayment that someone else has taken. Do you also see the absurdity in its meaning?
If you are taking a loan, then should it not be you who needs to provide that assurance. If your word is not enough, then I am sure the guarantor’s word cannot be as well. This clause in the loan agreement is doing nothing but condescending with the borrower’s ability to repayment and his self-respect. And that should be reason enough to make loans without guarantors more commonplace than any other kind.
WHY THE ROLE OF GUARANTOR NEEDS TO BE CUT?
Getting a loan is not an easy task. Nobody will give you one based upon how well you dressed that particular day. No, the loan acquisition process is quite long and tedious and rightfully so. Even when siblings give each other a loan of 5 pounds, they ask a lot of questions to make the brother or sister realise that the repayment is of the essence.
The banks and other lending institutions have ways that are pretty much enough to know what they want. These are;
- THE SALARY AND FINANCIAL STATEMENTS
When you apply for a loan, a bank primarily asks for two things straight. One is your salary slips. This is proposed to know the amount of money you are banking every month. The next is your financial statements or the bank statement that will indicate the expenses and savings every month for the past year.
For instance, if your income is about £2000 and you are expending £1800 every month, you will not be fit to acquire a loan of £10,000 with a monthly instalment of £500, which is logical. Had your income been more or your expenses been less, you would have gotten that loan easily.
- THE CREDIT HISTORY
Your credit history allows the lender to know how many times you have taken a loan. Out of those how many times have you defaulted in your payments? If your credit history is favourable based upon your credit score, you should be able to get a loan quickly. A fair credit score means you have never jumped any instalments and have always repaid your loan timely; however, a poor credit score says the opposite.
Today the loan markets have changed slightly, there is a category of very bad credit loans with no guarantor from the direct lender, but very few lenders are willing to take this risk and that also a relatively higher interest rate.
- THE COLLATERAL
Collateral also acts as a guarantee, but instead of a person, it is an object. This collateral can be your home, your land and even jewellery. If you do not repay the loan, the lender has the right to sell it off to reimburse himself for his losses. Again, a logical way of securing finance. All of these are still being done, yet banks are not fully satisfied. They don’t realise that getting a guarantor pretty redundant and serves no need when they have other more efficient tools of getting to know the safety of their money. Maybe one day, the realisation would finally sink in.