The peer-to-peer lender Guarantor My Loan brings together both borrowers and lenders seeking better rates than they might get elsewhere.
Launched in Norwich in 2014, Guarantor My Loan aims to help borrowers who feel let down by banks and other traditional lenders which won’t lend to them because of a blemished or non-existent credit record.
What is a guarantor loan?
A guarantor loan requires a friend or relative of the borrower to agree that they will pay back the loan should the borrower struggle to meet the repayments.
Although guarantor loans generally come with higher interest rates than traditional personal loans from mainstream banks, if you have bad credit, then applying with a guarantor could help you to access better rates than you might alone. This is all down to the level of risk that a lender believes it is taking on.
If you have a friend or relative willing to be a guarantor on your loan, you could borrow up to £10,000 over 1–5 years with Guarantor My Loan.
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Warning: Late repayments can cause you serious money problems. See our debt help guides.
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What is peer-to-peer lending?
Peer-to-peer (P2P) platforms match investors looking for competitive rates of return with borrowers looking for cheaper loans. Peer-to-peer loans cut out the institutional middle man and the overheads of physical branches, allowing borrowers and lenders to interact and perform transactions directly.
While traditional lenders may rely more heavily on your credit score and other credentials to decide whether you are eligible for a loan, some P2P loan companies give lenders a chance to decide case by case whether they will lend their money.
Guarantor My Loan at a glance
- Borrow £1,000 to £10,000 over 1–5 years. Choose a loan amount and term to suit your circumstances.
- Low rate… high fee. Guarantor My Loan charges a hefty service fee which is bundled in with your loan. It’s a percentage of your loan, so the more you borrow the greater your fee. Always check the total amount repayable before agreeing to your loan and bear in mind that while paying back your loan early may save you money in interest, the full fee may still be payable, so you might not save as much as you’d thought.
- An “unsecured” loan. Your loan is not secured against an asset such as your car or home (or that of your guarantor), though you may find it easier to get approved if your guarantor is a homeowner.
- Backed by your guarantor. Your loan will need to be guaranteed by a friend or relative who will commit to stepping in should you fail to repay your loan.
- Cashback incentive. Unusually, if you make your first 12 repayments in full and on time, your guarantor can claim cashback equivalent to one month’s repayment.
- Low credit scores considered. Guarantor My Loan says it will consider your application even if you have a low credit score, but your guarantor needs a good credit score.
- Late payment fee. If you fail to make a payment on time, you’ll be charged a one-off fee. You’ll also incur additional interest and damage your credit record.
Am I eligible for a Guarantor My Loan guarantor loan?
To apply for a Guarantor My Loan guarantor loan, you must:
- Be aged over 18
- Live in the UK
- Have a valid bank account
- Be able to comfortably afford to meet the repayments
- Have a friend or relative willing to be your guarantor
Your guarantor must:
- Be aged between 21 and 75
- Have a valid bank account
- Be able to take over your repayments if needed
- Know you well and trust you
- Have a good credit history
- Be a UK homeowner or tenant (homeowners are more likely to be accepted)
How can I apply?
If you think that a Guarantor My Loan guarantor loan is the best option for you, both you and your guarantor will need to fill out an online application form. Guarantor My Loan states that you should receive a reply within 60 minutes (in office hours) of your completed application forms being received.
While applications for traditional personal loans might simply be put through an algorithm to get a “Yay” or “Nay”, with a guarantor loan, the lender (or in this case, the platform) will want to speak with both you and your guarantor over the phone to make sure it has all the correct details and to ask supporting questions. Guarantor My Loan will want to make sure that your guarantor understands the terms of the loan and can afford to repay the loan if required.
Once approved, the money will be sent to your guarantor’s bank account on the same day.
Guarantor My Loan also asks for your Internet banking login details. While this is not unheard of, it is becoming rarer. It will use visibility of your transactions to assess affordability but won’t have the ability to change any of your banking details or set up standing orders/direct debits.
How do I pay back my loan?
You will usually make your repayments via direct debit. If a payment is not received, Guarantor My Loan will contact you to understand the reason behind the failed payment. If it cannot contact you, it may exercise its right to use a continuous payment authority (CPA) to collect the money from your bank account. It will only use your guarantor as a last resort.
What is a continuous payment authority (CPA)?A CPA is a type of regular automatic payment from your bank account, allowing a lender to take payments of differing amounts on a date (or dates) of its choosing.
Frequently asked questions