Best Guarantor loans

A guarantor loan is where a third party, the guarantor, provides reassurance that they'll repay the loan if the borrower can't.

During the application for a guarantor loan, you'll provide details of your guarantor. The lender will carry out credit checks on them to be satisfied they can repay the loan if needed. You'll make repayments, but if you're unable to at any point, the guarantor can step in.

Guarantor loans can help people with poor credit history access borrowed funds, but they should be used carefully as they often carry high interest rates.

A guarantor is usually someone who knows you well and has a good credit history, often a parent, family member or close friend. They must be willing to repay the loan if you can't and most lenders require the guarantor to be a homeowner, though some accept non-homeowners. The guarantor will be subject to a credit check and affordability assessment by the lender.

Taking on a guarantor role will typically appear on the guarantor's credit file, particularly if the loan falls into arrears or the guarantor is asked to make payments. Even if the loan is repaid without issue, the commitment may be visible to other lenders when the guarantor applies for credit of their own. It's important that both the borrower and guarantor fully understand the implications before proceeding.

If you're struggling to access credit without a guarantor, there are alternatives worth exploring. Credit builder credit cards can help improve your credit score over time, credit unions may offer more flexible lending criteria and some lenders specialise in loans for people with poor credit, though these often carry higher interest rates. Improving your credit score before applying for a loan - by registering on the electoral roll, paying bills on time and reducing existing debt - can also open up more options.