A guarantor is someone who will make payments on a loan if the borrower fails to pay.
If the borrower has not had credit before, they will have no credit history. This means that credit reference agencies will give them a low score, as they have no way of knowing if they will repay the loan or not. If people have failed to repay loans in the past, then credit reference agencies will naturally give them a very low score, which could make it almost impossible to get credit.
This is where the guarantor comes in. The guarantor will know the borrower and know if they are likely to make the loan payments or not. No one is going to be a guarantor if they think the borrower is not going to make payments, which is why most of our borrowers’ guarantors are close family and friends.
To meet our guarantor criteria, you need to.....
If you do not feel completely sure that the borrower is going to make repayments, or you don't know the borrower well enough, DO NOT be a guarantor on their loan. Check out our handy decision tree to help you decide if being a guarantor is right for you.
There are many reasons why you might choose be a guarantor, here are some of them:-
When the borrower has read and signed their contract they will receive an e-mail and SMS with a link to your contract as guarantor. They will send this to you by text message or email.
After we’ve carried out all our checks, made sure you and the borrower understand your obligations and you can both afford repayments on the loan if required, we will pay the loan amount directly into your bank account.
This is to protect you from fraud and also gives you more time to make sure you’re comfortable with being a guarantor before you transfer the funds over to the borrower.
If the borrower fails to make a monthly repayment, we’ll send you and the customer an alert by text and email. This is to let you know what's going on as soon as we know about it. We will then attempt to contact the customer to see what has gone wrong. If we fail to contact the customer we will try to take the payment from their debit card.
If that fails, we will continue to try and contact the borrower. After five working days, if we are unsuccessful in contacting them, we will then use the CPA to clear the arrears with your debit card. If both cards fail, a late payment fee may be added and a letter sent to the customer. As guarantor you will also receive a copy.
Once you are aware of the customer is not making a payment, we would recommend you contact them to see what has happened and contact our team as soon as you can. If you are aware of the customer having issues you can log in and make a payment online to clear the arrears yourself before a late fee is added or the loan goes into default.
If the loan goes into default we will notify you and the customer, allowing you 14 days to clear the arrears. On the 15th day from us sending you a default notice we will use the CPA to clear the arrears with your debit card or enforce the guarantee provided.
Once payment has been received by card we notify you by email and text SMS.