TFS Loans Review

TFS Loans offer just one type of loan called a Guarantor Loan.

• This type of loan requires the borrower to have another person co-sign the loan with them, guaranteeing to the loan provider that, in case the borrower fails to make the monthly repayment, the guarantor will do it instead.
• This guarantor is usually a family member or friend of the borrower, basically, someone who trusts the borrower to make the repayment in time.

From TFS Loans perspective, this guarantee from another person is enough evidence to approve the loan, and that is why a borrower’s credit history is not taken into consideration when making the loan approval decision.

This makes guarantor loans especially attractive to those with a poor or no credit history, as such borrowers are unable to secure affordable loans from other loan providers either due to ineligibility or high interest charges.

• TFS Loans allows borrowing of up to £15,000 at a time, and repayments can be made in monthly instalments, that are determined at the beginning of the loan agreement, over a minimum period of 24 months (2 years) and a maximum period of 60 months (5 years) depending upon the amount of the loan.

The following table shows the repayment times allowed under different loan amounts.

According to the lender’s website, guarantor loans offer borrowers a cheaper source of funds compared to other loan options available in the market. The Representative APR quoted by TFS Loans is 39.9% (for amounts £5,000-£10,000).

• Another feature of guarantor loans is that they are unsecured, meaning that borrowers are not required to pledge property or any other assets as collateral to acquire the loan.
• This means that the borrower can be living in rented accommodation without owning a house and still be eligible to secure a guarantor loan, provided a guarantor is available to co-sign it.

Since the amount that can be borrowed with a guarantor loan is substantial, it can be used in any legal way. For example, borrowers can use guarantor loans for debt consolidation purposes, to pay off their credit card bills, to put down-payment on a car, or to even spend on a wedding ceremony.

From the borrower’s perspective, the following eligibility criteria apply. The borrower must:

1. Have an eligible guarantor willing to co-sign the loan.
2. Be a UK resident
3. Be a homeowner if the borrower wishes to loan an amount greater than £10,000.
4. Be over the age of 18 and under the age of 75 till the time the loan is completely repaid.
5. Have a bank account in the UK (for Direct Debit)
6. Have adequate monthly income stream of above £1,000 to make monthly repayments.

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The guarantor needs to fulfil the following criteria. The guarantor must:

1) Own a home in the UK

This also includes homes that are under mortgage. Although TFS Guarantor Loans are unsecured, meaning they do not treat homes as collateral, the lender still requires that guarantors are homeowners.

2) Have proven good credit record

After securing permission from the guarantor, TFS conducts a mandatory credit check to assess whether the guarantor has an acceptable credit history. Hence, borrowers are encouraged to select guarantors that have a good record of credit.

3) Have the ability and willingness to make loan repayments on behalf of the borrower

It is the borrower’s responsibility to make monthly repayments in a timely manner and until the entire loan amount plus interest charges are repaid. However, in case the borrower experiences a financial setback and becomes unable to make the monthly loan repayments, TFS will approach the guarantor to make monthly repayments on the borrower’s behalf until the outstanding loan balance is fully repaid.

4) Be between the 18-75 age bracket

The guarantor needs to be above the age of 18 and below the age of 75, both at the loan’s initiation and till it is fully repaid. For example, an individual aged 73 cannot be a guarantor for a loan that has a payment plan spanning over three years, as the guarantor’s age would be above 75 with a few loan repayments still outstanding.

Here are the pros & cons for choosing TFS Loans:

The representative APR being charged varies by loan amount:

• £1,000-£2,500 ? 69.9% APR
• £3,000-£4,500 ? 48.9% APR
• £5,000-£10,000 ? 39.9% APR
• £10,500-£15,000 ? 29.9% APR

• TFS will charge a maximum of 58 days worth of interest in case the borrower wishes to pay off the loan earlier than the full loan term.
• There are no upfront or setup charges

The following examples illustrate the charges incurred on the borrower for different loan amounts and loan terms.

The following information needs to be given to TFS Loans to process a loan application:

1. Basic and contact information including names, dates of birth, phone numbers, and email addresses of both the borrower and the guarantor.
2. Guarantor is expected to give further information during the phone call with TFS Loans so the latter can conduct a credit check, including I.D. information, bank account details, and mortgage/property details.
3. Further documentation, such as bank statements or payslips, may be sought from both the borrower and the guarantor.

According to the TFS Loans website, it can take an average of 2 to 4 days for a loan application to be processed, although, in some cases, a loan may be approved within 24 hours of filing the application.

Step 1 – Filling out the application form

The first step requires the borrowers to fill in all the personal information as intimated on the application form. This application form can be accessed online by selecting the required loan amount and the repayment period, and then clicking Apply Online will take the borrower to the application form. Borrowers are also expected to provide the name as well as the phone number of the person who will act as their guarantor.

Step 2 – TFS Loans will have a phone meeting with the mentioned guarantor

At this stage, a representative from TFS Loans will call the guarantor of the borrower and thoroughly explain the nature of the loan and the role of the guarantor. The guarantor is also expected to provide personal information at this point to the TFS Loans representative, which is required to check the credit history of the guarantor. Once the credit check is passed and the loan is approved, the guarantor is informed of the amount that would be disbursed for the borrower.

Step 3 – Signing of documentation

After the phone call between TFS Loans and the guarantor, TFS will email or post the documents to both the guarantor as well as the borrower. Whether the documents are posted or emailed depends entirely upon the preferences of the borrower/guarantor. Upon receiving these documents, the guarantor is expected to go through them and develop a clear understanding of what is being said in them, after which the guarantor needs to sign the documents and send them back to TFS.

Step 4 – Final request for supplementary documentation, if needed

With a few applications, TFS may also request additional documentation, including payslips or a formal bank statement, from the guarantor at this point.

Step 5 – Another call with the guarantor

Another call is made by TFS to the guarantor in case the guarantor has any further questions before the loan amount is disbursed. During this call, the guarantor is also told exactly when and where the funds would be transferred by TFS.

Step 6 – Loan disbursement

Finally, TFS makes the transfer into the guarantor’s stipulated bank account. It is expected that the guarantor will then pass on the funds to the borrower.