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How to get the best deal on a £10,000 guarantor loan
£10,000 is towards the upper limit of what you can borrow with a guarantor loan. Here's how to find the most competitive rate and give your application the best chance of success.
If you’re looking to borrow £10,000 and your credit rating is preventing you from getting a traditional personal loan, then a guarantor loan could be an option. Your guarantor could be a friend, relative or colleague with an excellent credit score, who is comfortable making payments if you were to default on the loan.
Whether you need funds for home improvements, or a wedding or to consolidate your existing debt, a £10,000 loan could prove incredibly useful.
If you have a poor or limited credit rating, a friend or relative with healthier finances could provide a helping hand for you to borrow. For a £10,000 loan, your guarantor must have an excellent credit score, own their own home and be willing and able to make payments on your loan if you can’t.
For a £10,000 loan, many borrowers would require a longer loan term to keep the monthly payments affordable. Lenders usually offer up to five years to pay off the £10,000 plus interest and fees. Over a five-year loan, your monthly repayments would come in at more than £300, so it’s important to be realistic about what’s affordable. Broadly speaking, shorter loans are cheaper, but come with higher instalments, while longer loans are more affordable month-to-month but cost you more overall.
Compare £10,000 guarantor loans
How to compare £10,000 guarantor loans
Consider each of the following key factors when comparing lenders that offer £10,000 guarantor personal loans:
- Total payable. This is often the most important factor to focus on when comparing £10,000 loans. You should look at the total amount payable, with interest and fees adding a substantial amount to the original loan.
- Available loan durations. Most lenders require the guarantor loan is paid off in a maximum of five years. You may seek the longest term possible to make the repayments on a £10,000 loan affordable.
- Rate. It’s important to look at interest rates when deciding on which £10,000 guarantor loan to apply for. Be aware the advertised “representative APR” may not be the rate you are offered by the lender. This rate is usually reserved for applications that the lender deems to be the lowest risk.
- Eligibility. Each lender will have its own eligibility criteria for both you and your guarantor to meet. For a £10,000 guarantor loan, your guarantor will need to be a homeowner with an excellent credit rating.
How to get approved for a £10,000 guarantor loan
Most lenders try to process your application and give you a decision within 24 hours. However, there are factors which can delay the application, or even result in it being rejected. If you and your guarantor take care to be accurate and truthful in your application, you’re more likely to be approved faster.
- Make sure you’re realistic about what you can afford. The average £10,000 guarantor loan requires monthly payments over £325. Are you sure you can pay this amount? Does your guarantor realise how much they would be expected to pay if you missed a payment?
- Be accurate and honest in your application form. You and your guarantor must be honest with each other about your financial situations. Double-check the application form for errors to avoid delays.
- Check the minimum eligibility criteria. Make sure both you and your guarantor fulfil the separate criteria, such as minimum age and credit rating, and that you don’t have shared finances, such as a joint bank account or a mortgage.
- Choose your guarantor carefully. Do they have the right credentials to appeal to a lender? The better your guarantor’s credit score, the better chance of getting your loan quickly.
- Prep your guarantor. It’s a big responsibility for your guarantor, so they need to be fully aware of what they’re taking on. They also need to be on hand to complete their part of any online forms and, if necessary, available to speak with the lender over the phone. It’s the guarantor who actually receives the funds from the lender, so you’ll need them to transfer the funds to you.
- Be available. Both you and your guarantor need to be able to take a phone call from the lender or to respond to emails during the approval process.
£10,000 loan illustrations
Get an idea of how much you’ll pay monthly and overall on a £10,000 guarantor loan with our handy table.
|Interest rate 35.9% fixed per year||Interest rate 39.9% fixed per year||Interest rate 49.9% fixed per year|
|3 year term||£430.40 monthly|
|4 year term||£366.31 monthly|
|5 year term||£330.14 monthly|
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