A guarantor loan is a type of unsecured loan that requires a trusted person (friend, family, neighbour or colleague) to co-sign your loan agreement in order for you to get the loan.
A guarantor is someone who trusts you to make your loan payments and is happy to make any payments that you do not. You can look at it as a sort of insurance for a lender - they want to be confident they’ll be paid back for the money they decide to lend you.
If your credit score is less than perfect, lenders would like to hear from someone that trusts you to make your loan repayments and agrees to make them on your behalf if you do not. Having a guarantor can sometimes make it easier to get a loan.
Many people will use a friend or family member because they tend to know you best but a guarantor can be anyone such as a work colleague, neighbour or employer.
Your guarantor will need to provide some personal information such as name, date of birth, contact information, etc and will have to agree to credit checks and provide evidence of their finances as part of your application. The specific criteria may differ slightly with each lender.
Your guarantor’s credit file will be checked as part of your application so that the lender can make sure they’re financially stable and they haven’t had any trouble paying their bills in the past.
We understand that sometimes there will be instances where customers really can’t find a guarantor. It is possible to get a loan without a guarantor however, it’s usually more difficult and works out to be more expensive for you in the long run.
Reconsider whether you really need a loan at all and perhaps also take a look at your current situation - could you pull together the cash by cutting back on your outgoings? For more information, read our guide No Guarantor? No Problem!