Compare the best guarantor loans of November 2019

You can still get a loan if you don’t meet the eligibility criteria or if your credit record isn't perfect.

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What does guaranteeing a loan mean for the borrower and the guarantor? This guide will take you through the ins and outs of guarantor personal loans, the benefits available to borrowers and how to avoid some common pitfalls.

What does it mean to guarantee a loan?

Lenders use a number of factors (such as your credit score, the amount of time you have worked for your current employer etc.) in order to help them determine which applicants would present the least risk. If you don’t meet one of these requirements, you might not be able to get approved for a loan despite it being perfectly affordable for you. In such a situation, you could consider enlisting the help of a family member or a close friend to act as a guarantor.

When you ask someone to guarantee your loan, you are asking them to take on your debt if you default on your loan. If you agree to go guarantor on someone’s loan, you become legally responsible for the debt if they become unable to manage their repayments. Crucially, acting as guarantor does not mean “putting in a good word” for somebody, or providing a reference – you are volunteering to repay the loan in full (plus any interest and fees) if the borrower doesn’t.

If you are a guarantor and you apply for further credit of your own, you may need to declare the guarantee on your application.

The guarantor’s credit rating should not be affected unless the borrower defaults and the guarantor then fails to meet a repayment. However if the guarantor applies for a mortgage for example, the size of mortgage they could get might be affected by the guarantor loan, since they could find themselves responsible for that debt at any time.

Amigo Guarantor Personal Loan – Get 1 month interest-free

Borrow up to £10,000 within 24 hours with a guarantor

If a limited credit record is holding you back from the money you need, a guarantor loan can be a great option – allowing you to borrow money while building your credit score.

  • Amigo loans will not judge you based on your credit score
  • Loans of £500-£10,000 over 1-5 years
  • Loans normally paid out within 24hrs of the guarantor being accepted

Representative example: Borrow £5,000.00 over 3 years at a rate of 49.9% p.a. (fixed). Representative APR 49.9% and total payable £8,782.92 in monthly repayments of £243.97.

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Compare guarantor loans

Table: sorted by representative APR, promoted deals first
Name Product Total Payable Monthly Repayment Representative APR
Representative example: Borrow £10,000.00 over 3 years at a rate of 49.7% p.a. (fixed). Representative APR 49.7% and total payable £17,537.04 in monthly repayments of £487.14.
Representative example: Borrow £6,000.00 over 3 years at a rate of 47.9% p.a. (fixed). Representative APR 47.9% and total payable £10,364.04 in monthly repayments of £287.89.
Representative example: Borrow £5,000.00 over 3 years at a rate of 49.9% p.a. (fixed). Representative APR 49.9% and total payable £8,782.92 in monthly repayments of £243.97.
Representative example: Borrow £10,000.00 over 3 years at a rate of 49.7% p.a. (fixed). Representative APR 49.7% and total payable £17,537.04 in monthly repayments of £487.14.
Representative example: Borrow £10,000.00 over 3 years at a rate of 47.8% p.a. (fixed). Representative APR 47.8% and total payable £17,259.12 in monthly repayments of £479.42.

Compare up to 4 providers

Name Product Total Payable Monthly Repayment Representative APR
Representative example: Borrow £14,000.00 over 3 years at a rate of 29.9% p.a. (fixed). Representative APR 29.9% and total payable £20,426.40 in monthly repayments of £567.40.
Representative example: Borrow £10,000.00 over 3 years at a rate of 49.5% p.a. (fixed). Representative APR 49.5% and total payable £17,507.88 in monthly repayments of £486.33.

Compare up to 4 providers

Please note: You should always refer to your loan agreement for exact repayment amounts as they may vary from our results.

What should I look for in a guarantor loan?

When it comes to comparing guarantor loans, there’s some key features to look for. Look at each loan’s features and costs before deciding which one suits your needs.

  • Total payable. How much of the loan amount, plus fees and interest you will be expect to pay.
  • Interest rate. Most guarantor loans charge a fixed rate of interest, meaning your monthly repayments will stay the same throughout the loan. Remember that the advertised rate is not necessarily the rate that the lender will offer you.
  • Fees. Are there any application/set-up/product, late payment, early repayment or overpayment fees?
  • Loan terms and amounts. Aim for a shorter term that gives you monthly repayments you can afford. The longer the loan period, the more money you are likely to pay.
  • Eligibility criteria. Does the borrower and guarantor both meet their individual criteria?
  • Early repayment. There might not be any fees for repaying your loan early, but many lenders will charge an additional two months’ interest on any sums repaid ahead of time.

What is APR?

If you’re comparing any credit-based products, it won’t be long before you’ll come across the Annual Percentage Rate (APR). This figure is designed to provide an annual summary of the cost of a loan. It takes into account both interest and any mandatory charges to be paid (for example an arrangement fee) over the duration of a loan.

All lenders must calculate the APR of their products in the same way, and must tell you the APR before you sign an agreement, so for consumers it can be a handy tool for comparison. Bear in mind, however, that lenders are only obliged to award this rate to 51% of those who take out the loan – the other 49% could pay more. That’s why it’s often referred to as the representative APR.

With guarantor loans, you’ll often see two representative APRs for each provider, and which one applies to your circumstances will depend on whether your guarantor is a homeowner or not.

Homeowner or non-homeowner guarantor loans

Some lenders divide their loans into two categories – either for homeowner guarantors or non-homeowner guarantors. The term “non-homeowner” refers to the residential status of the guarantor, not the applicant (borrower).

Non-homeowner or tenant guarantor loans usually have a higher interest rate than homeowner guarantor loans, because of the perceived increased risk to the lender and the complication of involving a guarantor.

Application process

These are the typical steps that an application for a guarantor loan will go through:

1
Applicant applies
Fill in details and sign agreement.
2
Guarantor fills in details
Your guarantor adds their info.
3
Credit & affordability checks
Both applicant and guarantor are checked by the lender.
4
Guarantor signs agreement
Once they're happy with the loan offer.
5
Lender contacts both parties
All parties may need to speak over the phone.
6
Loan is offered
Once lender is satisfied with both parties.
7
Offer is accepted
Applicant accepts and signs the offer.
8
Funds transferred
Loan is sent to guarantor's bank account, who can then transfer to applicant.

Who can be my guarantor?

Criteria will vary from lender to lender, but as a minimum, you should expect that guarantor must:

  • Age 21-75.
  • Not be your spouse or partner.
  • Have a strong credit record.
  • Have an income (employed, self-employed or a pension).
  • UK resident and hold a UK bank account.
  • Have completely separate finances to your own.
  • Give their full consent to act as guarantor and understand the commitment they are undertaking.

Not every personal loan is a “guarantor” personal loan. Using a guarantor is a feature offered by some specialist lenders, including those listed above.

Going guarantor? Consider the following before you say “yes”

  • I am satisfied that the borrower can manage the loan repayments. This is up to you to ensure, and may involve you seeking independent financial advice.
  • I have checked the terms of the loan agreement. This includes checking whether you can expect to be notified if the borrower defaults on the loan, and the extent of your liability.
  • I understand the lender doesn’t have to proceed with enforcement against the borrower before taking legal action against me as a guarantor. You have no right to insist on this as a guarantor.
  • I understand that I could end up paying more than the original amount borrowed. Unlike some forms of borrowing, interest on guarantor personal loans is not capped by the Financial Conduct Authority (FCA).

What documents do you need to open a personal loan?

What is the difference between a guarantor and a co-borrower?

If you’re a co-borrower, you are listed on the loan as a borrower and are jointly liable for the debt. If you are a guarantor, you only become responsible for the debt when the borrower defaults on the loan.

Frequently asked questions

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