STOPPING BEING A GUARANTOR IS NOT EASY!
So think carefully before agreeing to be a guarantor in the first place 🤔
Typically, if you want to stop being a guarantor for a loan
- You’ll have to approach the lender directly
- Their decision will depend on your personal circumstances
- For more information see our Guide to Being a Loan Guarantor
6 WAYS TO STOP BEING A GUARANTOR
1. BEFORE THE LOAN’S BEEN PAID OUT
If you change your mind about being a guarantor before the monies have been paid out – contact the lender and inform them
Typically this will stop the application with
- No obligation for the borrower or guarantor to proceed
- No costs
If the borrower wants to proceed with their application, they will, however, need to find another guarantor.
2. DURING THE 14-DAY COOLING-OFF PERIOD
There is a 14-day cooling-off period typically from the signing of the loan agreement, or when you receive a copy of the agreement 🧊
Check this with your lender
During this period
- Option of canceling – the borrower has the option of canceling the agreement and has 30 days to repay the finds in full (including interest and charges).
- Unsure – if you are unsure as to whether you will be able to meet your responsibilities as a guarantor, then approach the borrower and discuss this option.
- The Money Advice Services article on Personal Loans
- Citizens Advice’s article on Cancelling a loan or credit agreement
3. IF AN ADDITIONAL OR TOP-UP LOAN IS GRANTED WITHOUT CONSENT
If the borrower has taken another loan with the same lender without your knowledge or consent 😠
- Contact the lender – you can contact the lender and ask them to consider removing your guarantor’s responsibilities due to a significant change in circumstances.
- Liable – you are likely to be liable to repay the outstanding on the original amount sanctioned.
4. IF YOU FIND A SUITABLE REPLACEMENT GUARANTOR *
If your circumstances change
- Propose alternative guarantor – if you have found a suitable substitute guarantor for the loan
If the lender is 100% certain that the credentials of the proposed guarantor are suitable, they may consider allowing the swap to be made.
* This decision is solely at the discretion of your individual lender.
For example, Amigo Loans will only allow the guarantor to be changed in the period between the loan application being agreed and the money being paid out.
5. IF THE LOAN IS REPAID IN FULL BY THE BORROWER
The main way to remove your responsibilities as a guarantor is for the borrower to repay the loan in full 💸
- Most lenders allow early repayments in full
- Without penalty
- Contact the lender to discuss
6. IF YOU REPAY THE LOAN IN FULL
If you repay the debt in full, then you will be released of your guarantor obligations
- If you have this money – if you have the funds is to do this, and have the borrower repay the debt back to you as a loan.
- Early repayments – most lenders allow early repayments in full.
CAN I CHANGE MY GUARANTOR?
At the time of writing, once the loan agreements have been signed, and loan funds paid out, it’s not possible to change your guarantor 👎
- Change of circumstance – though this is always subject to change, and if there is a genuine reason as to why your guarantor should be changed (such as a change in their circumstances), you should contact your lender straight away to discuss your options.
- Cooling-off period – note the 14-day cooling-off period, so if you really do need to change your guarantor, it’s theoretically possible to cancel your agreement in this period, pay back the loan, then take out a new loan with your replacement guarantor. However, you could be liable for loan fees, depending on the specific lender’s terms.
WHAT HAPPENS IF MY GUARANTOR DIES?
In the sad event of your guarantor dying, you should contact your lender to discuss the situation 📞
- Claim over their estate – the lender will probably have a claim over their estate or property in order to recover any debts due
Your guarantor’s estate will only liable for your loan debts if you stop paying
NEED MORE HELP?
This article does not constitute advice
Should you require any further help contact
- Your lender to discuss in detail
- The Financial Ombudsman
- Citizens Advice
- The Money Advice Service
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