Finding the right guarantor for a loan
A guarantor loan is a great way to borrow the money you need by having the extra security of someone vouching for you and promising to step in if you can’t keep up repayments. Finding the right person to be your guarantor is not always an easy task and several factors need to be considered carefully before you make a decision.
Does a guarantor have to be family?
A guarantor does not have to be a family member, although this is a logical choice. Being a guarantor is a role that requires placing a lot of trust in you as the borrower. If you miss any payments your guarantor will be asked to cough up cash on your behalf, so someone who knows you really well, like a parent or other family member would be a sensible pick.
Could a friend or neighbour be a guarantor?
A friend, neighbour or even a co-worker can be your guarantor. As long as they meet the criteria laid out by your lender and are happy to help you out, your guarantor doesn’t need to be related to you. In fact, it’s important that they don’t have any existing financial connection to you, so you shouldn’t already have a joint bank account or share a mortgage, for example.
What credentials must my guarantor have?
Your guarantor will need to be a permanent UK resident with a reasonably good credit history as your loan provider needs to be able to contact them easily. Your guarantor will also undergo checks by the lender to confirm that they could afford to make your payments on top of their own outgoings, if needed. Lenders will be looking for evidence that they are reliable too.
Does a guarantor have to be working?
While your guarantor won’t necessarily need to be working they will need to have the means to pay back the full loan amount, so they’ll undergo a credit check along with you at the start of the application process.
Can a guarantor be retired?
Your guarantor could be retired, but they would have to fit within the restrictions placed by the loan provider. Most providers typically ask that your guarantor is aged between 18 (sometimes 21), to 75.
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Written by Robert Bester
Published on 26th March 2018