Published: 04/08/2021

We explain guarantor loans


In this blog we explain guarantor loans. In essence they are designed to assist those with no credit history (such as a young person) or a bad credit history borrowing money. With a guarantor loan, someone else agrees to repay the loan or take up the repayments if the main borrower can’t. Guarantor loans are legally binding on the borrower and the guarantor, so should not be taken without serious consideration.

Guarantor criteria

As a loan guarantor, you must be over 18, and be a homeowner, or over21, with a good credit history and a separate bank account to the applicant. Often a guarantor will be a close relative, such as a parent, uncle, aunt or even grandparent.

The main qualification for a guarantor is that they must be financially able and willing to meet repayments if the borrower doesn’t. At 1Plus1 guarantor loans, as responsible lenders, we carry out affordability and creditworthiness checks on the borrower and the guarantor to ensure our criteria are met.

What can a guarantor loan be used for?

A guarantor loan can be used just like an ordinary loan: buy a car, pay for a holiday, home improvements and even debt consolidation. Like any form of borrowing, avoid using a guarantor loan to pay for day-to-day expenses. You may need to consider your finances, especially if maybe you’re overspending. Taking out a loan when your finances aren’t controlled will likely to compound the problem.

If you are struggling with debt, here is a useful guide

12 steps to get debt-free. In addition to this, you’ll find that both the Citizen’s Advice Bureau and Money Helper Website can offer impartial advice, support and helpful guidance.

How much can I borrow?

This depends on your and your guarantor’s personal circumstances, current debts and credit history, like any other loan.  At 1Plus1 we want to be sure that both you and, more importantly, your guarantor can repay the loan.

What happens if I don’t pay?

If you can’t make your repayments, we have the right to seek these from the guarantor and could even require full repayment of the loan. Even if the guarantor’s own circumstances have changed since the loan was originally obtained, this will apply, for example loss of employment.

What are the risks of being a guarantor?

It’s a serious and lasting commitment being a guarantor, not to be entered into lightly. Stating the obvious, a guarantor is guaranteeing to us that should the borrower be unable to make the repayments, or stops paying for any reason, they will pay in their place. This can mean that the guarantor must repay the whole amount of the outstanding balance plus interest.

You should never agree to be a guarantor unless you are in a financial position to make the repayments for the borrower and are willing to accept legal responsibility for the debt. If you found yourself unable to pay the debt then your own credit record would be negatively affected. If you do have to pay this debt off for the borrower, this could impact your personal relationship with them.

If you think you may be interested in a 1Plus1 Loan, please give us a call on 0330 1200 313 and one of our friendly staff will be more than happy to discuss the process with you, or start your application here.