Compare Guarantor Loans

  • Guarantor loans can allow borrowers with poor credit ratings to get a loan
  • A guarantor will need to repay the loan should the borrower default
1 product found

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    • Guarantor My Loan logo

      Guarantor My Loan

      • Applicant and guarantor must both be homeowners
      • Representative APR
        29% APR
      • Available Amounts
        £1,000 to £10,000
      • Min / Max Terms
        1 to 5 years
      • Guarantor Type
        Homeowner

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Last updated on 30 November 2020.

How to choose a guarantor loan

One of the popular options for borrowers with bad credit scores is a guarantor loan. If you are lucky enough to have a close friend or loved one who is willing to help you obtain a loan, you will want to find a product that works for you both.

As the borrower, the loan will be in your name and you will be responsible for meeting the repayments. However, your guarantor will be waiting in the wings, as they are obligated to make the repayments if you struggle.

Finding the right loan is perhaps even more challenging when there are two people involved in the borrowing process. Your guarantor may want to check factors like interest rates and late payment fees, for example. Another issue to consider is that some loans require the guarantor to be a homeowner.

Whatever your specific requirements, our guarantor loan comparison table will help you make a start comparing guarantor loans. We also hope that our helpful guide below can shine some light on this borrowing option.

Deciding between different guarantor loan providers

Regardless of the provider, guarantor loans work in much the same way. The borrower applies for the loan, alongside a guarantor. The borrower is usually someone who would struggle to secure a loan on their own due to their credit history; they might be self-employed or have been declared bankrupt in the past, for example. The guarantor is usually a close family member or friend to the borrower who is financially sound and is willing to cover repayments should the borrower be unable.

Although most guarantor loans are extremely similar, there are subtle differences between lenders and products which consumers should be aware of. For example, some products only consider guarantors who own their own homes, loans also differ in the maximum loan amount available.

Comparing guarantor loans is a not dissimilar from comparing standard personal loans. Here are some of the variables you might want to consider when choosing a guarantor loan:

What to consider when choosing a guarantor loan

  • The cost of the loan: Guarantor loans will display their associated APR in the same way as any other loan, using APR is a useful way to compare the cost of different loans.
  • Minimum and maximum loan amounts: Think about how much you need to borrow. Can the lender provide you with the right value loan?
  • Minimum and maximum loan term: Ask yourself questions like ‘how long do I you need to repay the loan?’ and ‘how much can I afford each month?’. It’s important to ensure that you will be able to afford the monthly repayments that you commit to.
  • Lending criteria for the borrower: Consider whether you meet the lending criteria, as lenders are likely to check certain information, such as financial situation and employment status.
  • Lending criteria for the guarantor: Although guarantor loans are unsecured loans, lenders will often require guarantors to be homeowners, although some will also consider tenants. Other criteria, such as age, employment status, credit score and employment will also be checked.

Deciding whether to become a guarantor

This is not an easy decision to make. There are various reasons why you might decide to become a guarantor. Perhaps your adult child is struggling to find a loan due to past money problems, or maybe your close friend needs some help obtaining a loan because they are self-employed. Whatever the circumstances, the role of guarantor is not to be taken lightly.

Although the loan will be under the borrower’s name, the money will usually be paid into your account initially, and you will then need to transfer it to your borrower’s account. You will also need to be happy with the fact that the lender will carry out thorough credit and affordability checks on you during the application process.

However, there’s plenty more to weigh up when deciding whether to become a guarantor.

Choosing a guarantor loan FAQs

Does being a guarantor affect my credit record?

It can. You should be aware that your credit record could be negatively impacted if the borrower falls behind on repayments. This is why it’s very important to fully trust the person you are helping to borrow.

Can my wife/husband be my guarantor?

It is possible for a spouse to be a guarantor, but you can’t share a bank account.

Are guarantor loans expensive?

Interest rates charged on guarantor loans tend to be below those charged on some other bad credit loans and short-term loans, for example. However, they are also likely to be higher than the interest charged on regular personal loans aimed at people with healthy credit scores.

Can I get a guarantor loan if I am unemployed?

This will be more difficult as lenders do check if you can afford the repayments before offering you a guarantor loan. If you have no income, it is unlikely that you will be granted a loan. But if you have other sources of income these may well be considered. However, if you are self-employed or have just started a job and can show that you earn enough each month to cover the repayments, you could be offered a guarantor loan.

Are there basic criteria for being a guarantor that most lenders require?

Most lenders will have a minimum and maximum age for guarantors and will also usually need them to either own their own home or have a strong credit score – perhaps both. Guarantors are also usually required to be employed and they must not be financially connected to you. i.e. you cannot share a bank account with your guarantor.

See all guarantor loans providers