|Minimum Age||21 years|
|Credit Rating Accepted||poor|
You could get accepted for one of these loans with the help of a guarantor, even if you have a poor credit history.
Compare guarantor loans
Using our loan comparison you can find our best guarantor loan deals available. By comparing loans you know what's available in the market and ensure that you get the best deal for your needs.
Find a guarantor
The most important part of a guarantor loan is finding guarantor. This would be a family member, relative or friend who is willing who is financially stable and willing to step in and make repayments in case you are unable to.
Pick a deal that works for you
Once you have a guarantor, you just need to choose a deal that offers you the lowest interest rate and a term long enough to afford the monthly payments, while also ensuring you don't pay too much in interest overall.
Fill out an application
Once you've found a deal, you can fill out a guarantor loan application form, providing name and contact details, as well as financial details. The lender will then assess you and your guarantor's affordability for the loan.
Our services are provided at no cost to you. We may receive a commission from the companies we refer you to, but this does not affect what you will pay for the product you choose.
|Minimum Age||21 years|
|Credit Rating Accepted||poor|
A guarantor loan is a type of loan that requires a third party known as a guarantor — who is typically a family member or friend — to "guarantee" they'll pay off the debt if you cannot. These loans are designed for people with a bad credit history who may not be eligible for standard loans.
Lenders are more likely to offer a loan to borrowers with bad credit if a third party can guarantee the repayments should the original applicant default at any time. This reduces the risk to the lender, as the loan guarantor promises to pay back the loan back in case the borrower can’t.
If you’re applying for a guarantor loan, you’ll need to
You'll also need to demonstrate that you can afford the loan repayments.
Depending on the lender, you may be subject to minimum income requirements or be a homeowner. All lenders accept applicants with poor credit as long as the guarantor has a good credit file.
Guarantors are usually close friends, family members, or anyone you know you can trust.
Once you’ve chosen your guarantor and they've agreed to help you, you’ll need to make sure they qualify and that they’re aware of their responsibilities.
In order to qualify, they need to:
Be between the ages of 21 - 75
Have a regular form of income (this can include a pension)
Have a UK bank account
He a UK resident
Requirements do vary from lender to lender, and some have stricter rules than others. Some lenders won’t allow you to put your spouse as your guarantor. Others require the guarantor to have a strong credit score or be a homeowner.
When approaching your guarantor, make sure they are aware of their precise responsibilities and that they'll have to pay off the loan if you are unable to. It’s also worth telling them what you’ll need the loan for so they are aware of your situation.
When applying for your loan, lenders will ask about your relationship with your guarantor. They prefer you to pick someone you're close to as it is deemed that they will be more likely to take their responsibility seriously and pay back the loan.
Decide how much you want to borrow
How much money you need plays a major role in whether you'll be accepted for a loan. Only borrow as much as you need and can afford.
Calculate what you can afford to pay monthly
Getting a sense of how much you can afford to pay monthly is vital in making sure you get the right deal for your circumstances.
Compare guarantor loans
By using our comparison you make sure that you know what deals are available in the market so that you can make an informed decision.
Pick a deal
When choosing a deal make sure you look at the interest rate and any features that could be helpful to you.
Since the lender is taking more risk by lending to a borrower with bad credit, interest rates are typically higher on guarantor loans than on normal personal loans.
The interest rate charged will depend on your specific circumstances and can vary massively – anywhere between about 25% and 70% APR.
The interest rate depends on your lender and can fluctuate over time. You can usually borrow between £500 and £10,000 (sometimes more) for a period of between 12 months and five years – again, depending on the lender.
Guarantor loans are designed for those who are struggling to get approved for standard loans.
The main advantage is that this allows those who have bad credit to borrow money. If you can afford to repay the loan and have a reliable guarantor with good credit, you’ll most likely be accepted for a guarantor loan.
These loans can also be processed quickly and arrive in your account in a few days. So you can use these loans for emergency situations, essential purchases or to consolidate existing debt. This type of loan can also help you improve your credit score, which would allow you to apply for other loans and credit cards in the future with better rates.
The main risk that comes with a guarantor loan is held by the guarantor. If you’re not able to make the payments, the guarantor carries the risk and needs to make them for you.
This will impact their credit score and it will make it harder for them to get credit in the future. If the guarantor isn’t able to make the payments, it can lead to court action or repossession of assets.
Like most loans, the main risk is that you struggle with the repayments and start to fall behind with your monthly instalments. It's worth mentioning that defaulting on a guarantor loan could also affect your relationship with your guarantor.
Before agreeing to be someone’s guarantor, it’s vital to be fully aware of the situation and potential repercussions. Whenever in doubt, seek legal advice. Here are a few useful tips:
Write out a simple written contract with the borrower stating how you want to communicate, how often you want to receive updates, and in what circumstances they should get in contact with you.
Ensure that the guarantee is limited to that specific loan and that the borrower cannot use your guarantee for other loans such as mortgages or credit card debt.
When agreeing to be a guarantor, you’ll receive a copy of the agreement, the borrower's repayment schedule and the guarantee contract. Make sure to keep all the documentation somewhere safe and create digital copies if necessary.
You can read more about whether you should agree to be a guarantor
"Although guarantor loans can be a good option for people who are otherwise finding it difficult to get credit, it’s important that you and the guarantor are fully aware of the risks involved.
"Interest rates on these loans can also be quite high, and thus lead to further problems, so it's better to consider all other options before you opt for a guarantor loan."
There are some alternatives to guarantor loans that may be worth considering depending on your specific circumstances.
Credit Unions often offer smaller loans at a much lower interest up to a legal maximum of 3%. They usually lend for up to five years if the loan is unsecured, and up to 10 years if the loan is secured.
These loans are also helpful for people with bad credit, and sometimes offer options to pay loans back weekly rather than monthly. However, you’ll have to be a member of the credit union in order to apply for a loan and some require you to build up some savings beforehand.
Unsecured loans are loans that don't require collateral such as a house or car and are usually more expensive and riskier. Make sure to compare loan types with soft searches before applying for an unsecured loan. You’ll know if you could get approved before applying and it won’t affect your credit file.
If you have bad credit, you may still be able to get a loan, but you'll likely pay a higher interest rate and be limited in how much you can borrow.
As a borrower, you can receive a loan directly from another person via an online peer-to-peer lending platforms. This can be a good option for those who don’t want to go through a bank and want more flexible repayment periods. However, many P2P platforms will require you to pass a credit check and you may need to pay an application fee.
Lenders should also be aware that any money invested in P2P is not protected under the Financial Services Compensation Scheme (FSCS), meaning you could lose your money if the P2P company goes bust.
Finally, credit cards are another borrowing option for those with poor credit. If you already have several credit cards, pick the one with the lowest interest rate – some even offer 0% for a certain period of time.
If you have bad credit, you could opt for credit building credit cards, which have more lenient eligibility requirements. However, as with most bad credit borrowing, the interest rate will likely be much higher than regular credit cards and credit limits will also be much lower. But if you use it responsibly, it can help to improve your credit score.
For those who are having trouble keeping up with debt payments it's really important to seek help. The first step is to speak to your lenders and see if you can work out a payment plan to reduce your debt.
If that is unsuccessful, there are debt charities you can contact which offer free debt advice to help get out of debt¹.
We have always aimed to provide the best possible services to bridge the gap between our users and our clients. Over the years, we have been thrilled to be recognised by various prestigious bodies and organisations for those efforts.
It varies depending on your credit history and your income, but you can usually borrow between £1,000 and £10,000.
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.
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.
Yes, so avoid making too many applications in a short space of time as it could negatively impact your credit history.
Comparing guarantor loans could help you save money. Our award-winning loan comparison service makes sure you get our best interest rates. Our aim is to provide you with the most up-to-date information, as well as useful tools and calculators to help you make life's most important decisions and take control of your money.