Who Can Be A Guarantor?
Once you have decided a guarantor loan is right for you the next question is often “Who can be a guarantor?”. It’s important to know that each lender has a different guarantor criteria which includes:
- Residential Status, Income Types
- Age, Debt to income
- Affordability, Relationship to borrower
As we work with multiple lenders here at Talk Loans our guarantor criteria is a lot broader than any one lender.
Find out more about exactly who can be your guarantor further down the page, or if you would prefer to speak to one of our loan experts about the situation then give us a call on 01603 391104.
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Finding A Guarantor For Your Loan
We are very flexible with who can be a guarantor. They:
- Can be a homeowner, tenant, or living with friends/parents.
- Can be friends, relatives or work colleagues.
- Need to be between 21 and 75 years old.
- Can have a good or fair credit history.
As long as they can afford repayments and fit the above criteria it’s as simple as that!
So who can be a guarantor? For many first time applicants, asking somebody to be a guarantor can be the most daunting element of applying for a guarantor loan. The guarantor acts as an additional level of security for the lender because if you can’t keep up with the repayments on your loan, the lender may well ask the guarantor to step in and pay on your behalf.
This means the guarantor needs to be very comfortable with you and the loan you are thinking of taking out. You should be prepared to have a very open and frank conversation with your prospective guarantor as they will probably want to make sure you can afford the repayments.
All of this means you should spend some time thinking about the right person you could approach to act as your guarantor.
Can My Be A Homeowner Or Tenant?
In the early days of guarantor loans nearly all the lenders insisted the guarantor should be a homeowner. Nowadays, there are many lenders who will accept a guarantor who is a tenant (i.e. somebody who rents their home rather than owning it). Just to be clear – if the lender requires the guarantor to be a homeowner they do not have to own their home outright but can be paying a mortgage.
What Does My Guarantor’s Credit History Have To Be?
Your guarantor will need to have a fairly good credit file – whether they’re a homeowner or a tenant. Guarantors with a bad credit history will be unlikely to be accepted by the lenders.
Other Guarantor Criteria
The guarantor doesn’t have to be employed but if they are not they will need to be able to demonstrate an income from another means – such as a pension, annuity, trust fund etc. This is because the lenders will need to be comfortable that the guarantor can make the loan repayments if, for whatever reason, you are unable to.
Spouse or Partner?
Initially lenders were reluctant to accept your spouse or partner as a guarantor, and some still are. Their reasoning was that if you were unable to make the repayments then your spouse or partner would be under pressure to cover your contribution to the household. Some lenders will now accept your partner/spouse as a guarantor but they may be asked to show that they could afford the household bills if something happened to your income – for example if you lost your job.
Most lenders require your guarantor to be between 25 and 65 although there are some variations.
Relationship To You
Other than the requirements outlined above there are no real hard and fast requirements about the type of person you can ask to be your guarantor. The most common examples are;
- Family – other than the spousal relationship (above) family members are perfectly acceptable including siblings, parents, cousins, aunts, uncles or even your own children!
- Friends – one of the most common types of Guarantor. Our friends know us well and having the conversation with a friend can sometimes be easier than with somebody in your family
- Colleague/Boss – one of the more surprising categories perhaps but popular nonetheless.
- Member of your Community – such as your neighbour, minister etc.
As you can see the type of relationship with you isn’t of great importance to the lender but you will need to know them well enough to approach them regarding your finances.
Over the last few years the type of person who can be a guarantor has widened considerably. Nevertheless, as the above shows, the lenders do have some criteria about the type of person they’re looking for. If you have somebody in mind but are unsure whether they’ll be accepted, why not give us a call and talk to one of our loan experts. They’ll be able to discuss your individual circumstances with you before you approach the lender of your choice.
More Information About This Loan Type
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Guarantor Loans Representative Example: Borrow £4,000 over 36 months. Monthly repayment of £194.78. Total repayable is £7012.08. Interest payable is £3012.08. Fixed APR of 49.7%. Interest rate of 41%.
Personal Loans Representative Example: Borrow £300 over 6 months. Monthly repayment of £92.43. Total repayable is £554.58. Interest payable is £254.58. Fixed APR of 883.6%. Interest rate of 169.7%.
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