If you are borrowing money for the first time or have a bad credit history, a guarantor loan could help you borrow what you need.

They work the same way as an unsecured loan, but a friend or family member is responsible for paying back your loan if you cannot make the repayments.

Use this comparison to find a guarantor loan that offers the money you want to borrow at the cheapest price.

How to find the best guarantor loan

You should look for the loan that is cheapest to pay back. The cost of paying back your guarantor loan will be affected by the:

  • Loan amount: This is how much you can borrow, which is usually between 1,000 and 10,000. Your repayments will be split evenly, so you pay the same each month.

  • APR: This is the interest charged on what you borrow. The APR is much higher than a normal loan, so check you can afford the monthly payments before you apply.

  • Loan term: This is how long you have to pay back your loan. Most lenders offer terms of 1-5 years, but a shorter term costs less because you pay less interest overall.

While a guarantor loan can help you borrow more money if you are struggling to get an unsecured loan, you should only borrow what you can afford to pay back.

Who can be your guarantor?

You can ask a friend, family member or work colleague to be a guarantor, but they must be:

  • At least 18 years old (some lenders require them to be over 21)

  • In full time employment

  • Someone other than your spouse

  • Someone you do not share a bank account with

Your guarantor will have to pay back your loan if you cannot make your repayments, so make sure they understand their responsibility before you apply.

Guarantor loans FAQs

Q

How much can I borrow with a guarantor loan?

A

It varies depending on your credit history and your income, but you can usually borrow between 1,000 and 10,000.

Q

Are guarantor loans more expensive?

A

Yes, they can cost more than normal unsecured loans because the rates are much higher, but they may be cheaper than other bad credit loans.

Q

Can I list my spouse as a guarantor?

A

No, but friends or relatives can be listed on your loan application. Here is more information on who can act as a guarantor.

Q

What happens if I cannot pay back my loan?

A

The person listed as your guarantor will be responsible for paying back your loan. If your guarantor cannot pay your loan, they could be taken to court.

Q

What happens if I die before my loan is paid back?

A

Your guarantor may have to pay back the rest of your loan. Read the terms of your loan and check your guarantor is happy with them before you apply.

Q

Will a guarantor loan affect my credit rating?

A

Yes, so avoid making too many applications in a short space of time as it could negatively impact your credit history.

About our loans comparison

Q

Who do we include in this comparison?

A

We include every loan available directly from lenders. They are all from lenders regulated by the Financial Conduct Authority. Here is more information about how our website works.

Q

How do we make money from our comparison?

A

We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more here.

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