No Guarantor Needed For Any Of The Loans On This Site
Guarantor Loans Split Friends and Families When They Most Need Each Other
Quick Loans With No Guarantor
We won't ask you to provide a guarantor for any type of loan product on this site. The loans here are unsecured. Guarantor relationships are not something that we feel comfortable recommending to our customers.
What is a Guarantor loan?
These are loans where a friend or family member will co-sign the loan agreement and agree to cover any missed payments due to financial problems. Some will even require your Guarantor to take over if you die.
Background to Guarantor Loans
Guarantor loans have been around for several years; we can remember them as far back as the 1990s. They were pretty common in car finance arrangements. Parents would often be asked to guarantor agreements for their children to be approved.
Over the last ten years, they have become more mainstream. There are now guarantor credit products for mortgages and unsecured loans. We estimate that they now account for around 20% of the unsecured non-bank lending market in the UK.
Downsides to Guarantor Loans
The problem with Guarantor loans is that they are "bankruptcy proof". Even if the borrower files for bankruptcy, the loan will pass on to the Guarantor. This leads to a lot of arguments and breakdowns in what were once positive relationships.
We feel that Guarantor loans present too many moral hazards for us to recommend them to our customers. In our opinion, loans should be between the lender and the borrower. The lender takes a chance when they issue a loan; if the money is repaid on time, they make a profit, if not, they don't.
Unfortunately, this type of loan seems to be on the rise as lenders look to take on less risk. It might be that more than half the loans in the future are Guarantor'd, but it won't be something that this site ever gets involved in.
The only benefit we can see to having a Guarantor'd loan is that it is easier to have an application accepted. From what we know, it isn't cheaper and has no upside at all.
We would recommend quite strongly to all of our customers that they should avoid these products at all costs.
Can I Get Out Of A Guarantor Loan?
No, unfortunately you and your guarantor are locked into the agreement. Only by paying the loan off will your guarantor be released from the agreement. There really is no get out clause for a guarantor loan. Not even going bankrupt will release your guarantor.