Amigo Loans Reviews, Features, Pros & Cons
Alternative lending options have become more popular in a time when traditional lending organizations frequently reject loan applications because of strict credit score standards. Amigo Loans, a UK-based company, has become a prominent player in the lending market by providing guarantor loans to those with bad or little credit history. This article examines the idea of Amigo Loans, how they work, their advantages and potential downsides, and the overall effect they have on borrowers and the loan industry.
About Amigo Loan
Amigo Loans was founded in 2005 by James Benamor. The company quickly grew to become one of the UK’s leading providers of guarantor loans. In 2015, Amigo Loans was listed on the London Stock Exchange.
Amigo Loans has been criticized for its high-cost lending practices. The company’s loans typically have APRs of 49.9%, which is significantly higher than the average APR for personal loans in the UK. This means that borrowers who take out Amigo loans can end up paying thousands of pounds more in interest than they would if they took out a traditional loan.
In 2018, the Financial Conduct Authority (FCA) fined Amigo Loans £2.6 million for misleading customers about the cost of its loans. The FCA also ordered Amigo Loans to change its lending practices.
Despite the criticism, Amigo Loans remains a popular option for people who need a loan but have difficulty getting approved for traditional loans. The company’s loans are easy to apply for and can be funded quickly. However, borrowers should carefully consider the high cost of Amigo loans before taking one out.
How Amigo Loan Work
Amigo Loans offers guarantor loans to people who have difficulty getting approved for traditional loans. To qualify for an Amigo loan, the borrower must have a guarantor who agrees to repay the loan if the borrower defaults. The guarantor must be someone who has a good credit history and who is able to afford to repay the loan if necessary.
The amount of money that a borrower can borrow from Amigo Loans depends on their income and outgoings. The maximum loan amount is £10,000. The loan term can be up to 5 years.
The APR on Amigo loans is typically 49.9%. This means that for every £1,000 borrowed, the borrower will pay £499 in interest over the life of the loan.
Benefits of Amigo Loans
- Accessibility: Amigo Loans caters to individuals who may struggle to obtain credit from mainstream lenders due to their credit history. By providing guarantor loans, Amigo Loans opens up opportunities for borrowers who have limited options elsewhere.
- Flexibility: The company offers loans ranging from £500 to £10,000, with repayment periods between 12 and 60 months, allowing borrowers to choose terms that suit their financial circumstances.
- Credit Building: Successfully repaying an Amigo Loan can help borrowers rebuild their credit history. As loan activity is reported to credit reference agencies, responsible borrowing can improve credit scores over time.
- Transparent Pricing: Amigo Loans operates with a transparent fee structure, outlining all costs and interest rates upfront, ensuring borrowers have a clear understanding of their financial obligations.
- Supportive Customer Service: Amigo Loans prides itself on providing personalized customer service, with dedicated account managers assisting borrowers throughout the loan journey.
How To Contact Amigo Loans Customer Care Line
Amigo Loans Customer Care Line Support
For more enquiries contact Amigo loans on 01202629161 or send an email to hello@amigoloans.co.uk
Potential Drawbacks and Criticisms
- High-Interest Rates: One of the main criticisms of Amigo Loans is the relatively high-interest rates charged, reflecting the higher risk associated with lending to borrowers with poor credit histories. Borrowers should carefully assess their ability to repay the loan while considering the interest costs.
- Guarantor Risks: Guarantors are required to have a good credit history and must be fully aware of the potential consequences if the borrower fails to repay the loan. If the borrower defaults, the guarantor becomes legally responsible for the outstanding debt.
- Impact on Relationships: In some cases, disputes or strained relationships can arise between borrowers and guarantors if difficulties arise in repaying the loan. Clear communication and a thorough understanding of the responsibilities involved are essential to maintaining healthy relationships.
The Future of Amigo Loans
Amigo Loans has been facing increasing scrutiny in recent years. The company has been criticized for its high-cost lending practices and for its failure to adequately protect borrowers.
In 2022, Amigo Loans announced that it would stop lending new money. The company said that it was making this decision because it was no longer able to obtain the funding it needed to continue lending.
Amigo Loans is currently in the process of winding down its business. The company is still providing support to its existing customers, but it will no longer be offering new loans.
It is unclear what the future holds for Amigo Loans. The company may be able to find a buyer, or it may be forced to go into liquidation. Only time will tell what happens to this controversial lender.
The Pros and Cons of Amigo Loans
Pros
• Easy to apply for
• Funds can be released quickly
• No upfront fees
• Guarantor can help to improve the borrower’s credit score
Cons
• High-cost lending
• Long repayment terms
• Borrowers may be tempted to borrow more than they can afford
• Guarantor may be liable for the loan if the borrower defaults
Frequently asked questions
Q. What are the eligibility criteria for a guarantor?
A. A guarantor should be a homeowner or have a good credit history, be aged between 18 and 75, and have a regular income that demonstrates affordability. Guarantors cannot be financially linked to the borrower, such as a spouse or partner.
Q. How quickly can I receive the loan funds?
A. Once the loan is approved, Amigo Loans aims to transfer the funds within 24 hours. The exact timing may depend on the applicant’s bank and the completion of any necessary documentation.
Q. Will taking an Amigo Loan improve my credit score?
A. If you make regular repayments on time and in full, it can have a positive impact on your credit score. Amigo Loans reports loan activity to credit reference agencies, and responsible borrowing can help rebuild your credit history.
Q. What happens if I default on the loan?
A. If you are unable to make the loan repayments and default on the loan, the responsibility falls on the guarantor. The guarantor becomes legally obligated to repay the outstanding debt, and their credit score may be impacted if they fail to meet the repayment obligations.
Q. How does Amigo Loans ensure the security of my personal information?
A. Amigo Loans takes data security seriously and employs industry-standard security measures to protect customers’ personal information. They comply with the Data Protection Act and the General Data Protection Regulation (GDPR) to ensure the confidentiality and privacy of customer data.
Q. Is Amigo Loans regulated?
A. Yes, Amigo Loans is regulated by the Financial Conduct Authority (FCA) in the UK. The FCA sets rules and guidelines that financial institutions must follow to ensure fair treatment of customers and responsible lending practices.
terms, and the responsibilities involved for both the borrower and the guarantor. With recent regulatory changes, Amigo Loans has worked to address concerns and enhance its practices. As with any financial decision, potential borrowers should thoroughly evaluate their circumstances and seek independent financial advice before committing to an Amigo Loan.
Conclusion
By providing guarantor loans to people with few other options for credit, Amigo Loans has established itself as a prominent participant in the alternative lending sector. For customers who might have been turned down by conventional lenders, the organization offers accessibility, flexibility, and the chance to establish credit. While Amigo Loans has received criticism for its high interest rates and the potential for strained relationships between borrowers and guarantors, the business has made attempts to allay these worries and enhance its procedures.
If a borrower is considering an Amigo loan, they should carefully analyze their ability to repay the loan, taking into account the interest expenses and possible effects on their relationship with the guarantor. A strong borrower-guarantor relationship requires open communication and a comprehensive grasp of the obligations involved.
Regulatory changes implemented by Amigo Loans demonstrate the company’s commitment to ensuring fair treatment of customers and responsible lending practices. However, it is essential for potential borrowers to evaluate their specific circumstances, seek independent financial advice, and compare loan options before making a final decision.
Amigo Loans has undoubtedly provided a lifeline to individuals who struggle to access credit through traditional means. By bridging financial gaps with guarantor lending, the company offers a viable solution for those in need of financial support.