Let’s face it.
Applying for a guarantor loan is hard.
You have all of that boring loan stuff to wade through…You know, the jargon and other complicated things that the average man in the street won’t have a clue about. You can (if you prefer) read our mammoth guide to guarantor loans or read our review of every single guarantor lender.
However, you can also just carry on reading and simply visit each question below in turn.
Use the index at the front of this article to go right to the question you want answering.
So, in our attempt to take the mystery out of borrowing money, we have come up with a massive (and we mean massive) list of every single question we think you may ask when applying for a loan or acting as a guarantor to a loan.
So pour yourself a brew, sit back and get stuck into our list of the most frequently asked questions about guarantor loans.
Frequently Asked Questions
Can I find a Guarantor online?
No. There are a few ‘dodgy’ websites which offer services that state they will find you a guarantor for a loan. But how? Think about it. If someone approached you to be their guarantor for a £10,000 guarantor loan because they offered you a few hundred pounds, would you do it?
Of course not. There is no other way of finding a guarantor for your loan than asking a friend or family member to endorse you.
There is no way, no chance and no prospect of finding a guarantor for your loan application than there is of finding snow in the desert. Move on.
How old can my Guarantor be?
With most lenders, the guarantor has to be a minimum of 25 and no older than 75, although a few lenders like TFS Loans, allow the guarantor to be 21 at the time of application.
Does my Guarantor have to be working?
No, , your guarantor has to be receiving an income but this can be through a pension or investments. The most important thing is that they can prove that they can afford to repay the loan if they had to stand in for the borrower at any point.
Does my Guarantor have to be a homeowner?
Not any any more. Back in the early days of guarantor lending, all lenders would insist that they had to be homeowners but as the market for guaranteed loans has expanded, a number of lenders like George Banco now allow tenants to stand as a guarantor to the loan.
Does being a Guarantor affect my credit rating?
Not if the borrower conducts themself properly and pays the loan each and every month. If the borrower defaults on the loan (doesn’t pay it) then the loan repayments will fall to the guarantor. If they don’t pay the loan for any reason, then a record of this will be made on their credit file, potentially making it difficult for them to get credit in the future too.
Will being a Guarantor be a problem if I apply for a mortgage?
Like the answer above, if the borrower continues to make repayments on their loan then it should make absolutely zero difference when making a mortgage application. The mortgage lender will see that there is is a credit check made against them but that is all. As long as there are not tons of credit searches made against them in a short space of time, it will not affect your mortgage application in any way.
Does a Guarantor get credit checked?
Oh yes. Quite often and with most lenders, the borrower doesn’t get credit scored but will be credit checked. There is no point credit scoring the borrower because their credit history is going to be poor and their credit score is going to be low, hence why they are applying for a guarantor loan. The guarantor will be both credit checked and credit scored.
Can I be a Guarantor on a loan twice?
Yes you can. It all comes down to affordability. If the guarantor can afford to step in and take over the repayments on both loans (if it comes to that) then there is no issue being a guarantor on two separate loans.
Can I stop being a Guarantor?
Only when the loan term has ended. If you signed up to be a guarantor and the loan term was for 4 years, then you are in that loan for the whole of the 4 years, unless of course the loan is paid back early.
Does a Guarantor have to be a family member?
No, a friend or work colleague is more than acceptable.
Will you call my Guarantor in work?
Not always but some lenders insist on it. this is to give the lender comfort that the guarantor works where they say they do and whilst it will only take 2 or 3 minutes, it can be embarrassing if your co-workers hear it or know what’s going on.
How much does a Guarantor have to be earning?
Generally speaking, there is no minimum. Much more important is affordability and just like a mortgage application. guarantor lenders will need to see that you can afford to repay the loan if the borrower cannot.
What information must a Guarantor provide?
Proof of address (utility bill, bank statements, etc), proof of identity (passport, driving licence, etc) and possibly details of self employment (if applicable) or even perhaps a contract of employment for their current job. If your guarantor is also receiving benefits, then details will need to be provided.
Will the Guarantor have to produce bank statements?
What rights do I have as a Guarantor?
The same as the borrower. You will have entered into a Consumer Credit Contract which means you are bound under those rules and conditions. The conditions of the loan will be explained to you at the time of signing the various application forms, be they paper or electronic signatures.
What is the difference between a Guarantor and a Co-Borrower?
Not a huge amount as both are jointly responsible for the loan repayments until the loan is fully paid off.
Is there a Guarantor ‘get-out’ clause?
No. Once you are in, you are in and no legal wrangling will get you out.
Do I need a Guarantor to apply for car finance?
Not always. There are plenty of sub-prime car finance dealers out there who will accept you for car finance without the need for a guarantor. The current trend is for car finance providers to fit your car with a black box so if you don’t pay, they can switch your car off remotely, without them ever being near it. This ensures that car finance arrears are almost non existent with this type of bad credit car finance.
Ironically though, over half of all guarantor loan applications are made to purchase a car.
Do banks offer Guarantor loans?
No. Guarantor mortgages yes, guarantor loans no.
Why do I need a Guarantor?
Because usually, the person applying for the loan (the borrower) has credit that is so poor, no lender will consider them on their own merits. Therefore, the need for a guarantor is essential for the borrower to be accepted for finance.
Where can I find a Guarantor?
Perhaps a friend, family member or work colleague. Don’t look online for one – it just doesn’t work.
What if I can’t find a Guarantor?
If you have exhausted all of the possibilities with friends, family, neighbours and co-workers, then really, you have come to the end of the line. You will have to apply for a loan with a company that offers non- guarantor loans but the only problem with these is that even though they accept bad credit, the application criteria is far stricter so you may not get accepted.
What is a Guarantor Indemnity Agreement?
This is the official, legal document that states that the guarantor will step in and be responsible for the repayments on the loan if the borrower doesn’t.
How much can I borrow with a Guarantor loan?
The average is £7,500 but some lenders like UK Credit will go up to £10,000 and others like TFS Loans will go up to £15,000.
What if my Guarantor is unable to pay?
Then unfortunately, like any other legally binding financial contract, they will have to face the consequences. This could mean a default placed against them in the first instance and then a CCJ further down the line. either way, the ramifications for the guarantor are huge as it could potentially destroy their credit profile.
Best loan companies that don’t require a guarantor?
Difficult to say. Do a search on the net but be warned, the number of companies who offer loans that don’t require a guarantor are dwindling on an almost daily basis. Those that do offer them will be much stricter on who they will accept for a loan which means you may be left with a choice of just a few payday lenders and they, as we all know, charge pretty high rates for what they offer. Plus, they will never offer much more than £1,000.