Guide to Being a Loan Guarantor
What Is A Guarantor Who Can Be A Guarantor What It Means To Be One? Your Questions Answered
Help a friend or family member 🧑🤝🧑
More Questions? See below.
Borrow £3,250 over 36 months at a Representative Rate of 49.9% APR at an annual interest rate of 41.16% (fixed), you pay 36 instalments of £158.57. Total charge of credit is £2,464.57, total amount payable £5,714.67.
Typically people between 18 and 75 that meet the following criteria
During the application process, you need will need to prove that you can comfortably afford the repayments if the borrower defaults:
You need to be comfortable that if the borrower defaults you can afford their repayments.
It’s very important to have a great relationship with the borrower, plus
There are circumstances where you can stop 👍
For detailed information see our page
Before you e-sign the agreement you should make sure you
The minimum information you will need to know from the borrower includes
When you are happy with all the information that you have received and wish to proceed, you are ready to sign or e-sign the loan agreement with the lender.
For more information see
They are liable for the full balance of the outstanding loan from the time the borrower stops paying plus any interest and fees 💷
If they do not, they are subject to the same implications as if they had defaulted on an unsecured loan that they had taken out themselves.
It’s possible, read on 🤨
If you are considering a mortgage, we suggest you take professional independent financial advice prior to signing the guarantor agreement.
Apart from this, so long as you have a clean credit file, taking on this responsibility should not affect your mortgage eligibility.
As 2. above, there may be lenders that consider your potential loan payments as a guarantor when assessing loan affordability.
So, it is possible that this could reduce the credit available to you, so you should therefore consider your own needs for credit first.
With most lenders, if anything happens (such as repayments not being made) they will contact the guarantor to keep them informed. Plus
This is typically in the best interest of the account for both the borrower and the guarantor to stop arrears building and more serious action being taken further down the line.
For more information see
If you refuse to pay, the consequences can be the same as if you defaulted on a loan you’ve taken out yourself 😦
As you can see, there can be major implications to being a guarantor, so if you are not fully confident of your ability to make the loan repayments should the borrower default, then you are not suitable.
Your credit file is checked when the signed completed application is sent to the lender:
When the lender does their credit check this shows up on your file
This generally is not a problem unless you do make multiple applications in quick succession, lenders do not like seeing this as it implies that you have had multiple rejections.
This is unless the account goes into serious arrears, see:
It depends 🤔
Most lenders are reasonable and will give you the opportunity to make a payment if the borrower defaults, though you do need to be aware of this.
Please note that your credit history goes back six years, so you cannot have any missed payment or defaults on your file during this period.
Some lenders offer better rates if they are a homeowner. The loan is not secured on your property, but lenders see homeowners as more stable and less risk.
RIGHT TO CANCEL
IF THE 14-DAY RIGHT TO CANCEL WINDOW IS MISSED
It is always worth approaching your lender directly to ask them for any options that may exist, as lenders do sometimes change their terms and conditions.
You are helping a friend or family member access credit when they otherwise may be unable.
The guarantor loan is typically the most affordable type of loan for people with poor credit:
So, by becoming a loan backer you are helping someone potentially save a great deal of money.
This will depend on how well you know the borrower 🧑🤝🧑
Your relationship with the borrower and the steps they take to make you feel comfortable should help you to decide if they will repay or not.
They should be able to tell you:
This may make you feel more comfortable? You could also ask them to provide you with an income and expenditure statement.
When someone asks you there may be pressure to say “yes”; to bear in mind:
If, however, you are not comfortable then this is something you should not do.
NO, THESE ARE UNSECURED LOANS 😀
If however there was a situation where the borrower and guarantor defaulted on the loan and stopped paying, see
Typically, No 👎
As they’re required to make the loan repayments if the borrower stopped paying, if they were on more than one loan, this potentially gives them a high liability paying out for more than one loan at a time.
If they have a high income and good levels of affordability, all applications are taken on a case by case basis, we never say never, but it’s unlikely.
If you would rather watch then this page’s information is covered in the video below.
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(zero impact on your credit file)
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