Borrowing money is something that most of us will do at some point in our life. Usually it will help us to spread the cost of a large purchase, but sometimes it may be used to consolidate existing debt into manageable monthly repayments.

The use of subprime lending streams like guarantor loans has risen dramatically in the last decade. Typically, guarantor loan lenders will allow you to borrow anywhere between the £1,000 and £15,000 over 1-5 years. This makes them an ideal solution for those looking to spread the cost of a large purpose, that may otherwise be unaffordable.

Choosing to borrow money isn’t a decision that should be taken lightly. It’s important to ensure that your reason for borrowing money makes sense in the long-term and is not just a short-term fix. In today’s post we’re going to discuss 3 smart uses for a guarantor loan.

1. Debt consolidation

As we mentioned above, a popular use for guarantor loans is debt consolidation. With such easy access to credit cards, store cards and payday loans these days, you can quickly lose track of your spending. This can make budgeting extremely stressful and it can also increase the chances of missing payments along the way.

By borrowing a guarantor loan to pay off the outstanding balances on credit cards, store cards and other high-interest borrowing, you can consolidate the debt into one manageable monthly repayment. You can choose a loan term that creates affordable monthly repayments that are taken on a day of the month that suits you best. Not only could this save you money, but it will reduce the stress of having several forms of outstanding debt.

2. A new car

Another popular and smart use for a guarantor loan is the purchase of a new car. As vehicles get older, they typically start to accumulate more problems. As parts get worn, they need replacing which can be costly. Before you know it, you’re forking out £100s on a vehicle that is no longer worth much more that than.

At this point it’s often more cost-effective in the long-term to cut your losses and invest in a newer model. Not only will a newer vehicle be more reliable, but it may also carry cheaper road tax, cheaper insurance premiums and be more fuel efficient.

Unfortunately, not many of us will have the savings available to afford a new car up-front. Using a loan allows you to break the cost down into affordable monthly repayments that fit your budget. Guarantor loans can be a great alternative to vehicle financing for those without a perfect credit history.

3. Education

Being in a job or industry that you’re passionate about is the ultimate goal for most. We spend so much of our adult lives working, that it has a significant impact on our overall happiness in life.

The problem is, your perfect job may require skills or a qualification that you simply don’t have. Not only that, but the course required to gain the relevant skills or qualification costs thousands of pounds to complete.

Using a guarantor loan to purchase the course and then spreading the repayments over a period that suits you, has several benefits. Firstly, it gives you access to a qualification that you may never have been able to afford up-front. But mainly, it could be the key driver in getting you the job that you’ve always wanted and allowing you to earn more than you currently do.

Greater job satisfaction and more financial freedom makes for a much happier life.