Being a guarantor, whether it’s for a loan, someone’s rent or another credit agreement, is no small thing. Making the decision to vouch for someone entering into one of these agreements, and potentially taking up their repayments if they can’t afford them is not an easy one.
If you’re considering becoming someone’s guarantor then it’s worth educating yourself on what that actually means for you. Check who can be a guarantor, what your responsibilities are once you have become one and learn about the process of how it works.
Step 1. Register as a guarantor
The borrower will need to find the right lender for their guarantor loan. They’ll do this through comparing guarantor loans and finding the best lender for their needs. Once they have applied for the loan themselves the guarantor will need to register with the loan provider.
This will usually happen after direct communication from the lender. The loan provider will get in touch with the would-be guarantor, usually via email, allowing them to register as a guarantor through their system.
Step 2. Affordability checks
Once the guarantor has registered with the lender, a number of checks will take place before the application process is completed.
The lender will get in touch with the guarantor, usually via phone, to go over the details of the loan. They’ll also do some final affordability checks with the potential guarantor, to make sure that they are in the right position to act as a guarantor and pick up any payments the borrower may miss.
This stage will include a hard credit check on the guarantor which they’ll need to pass.
Step 3. Signing of loan agreement
Once these checks have been completed and the guarantor has passed them, there’s one more step before any money can be transferred. The guarantor must sign the loan agreement.
Signing a loan agreement may potentially need to be done to a physical copy, which will need to be sent back, but more often it will need to be done electronically, which greatly speeds up the process.
Step 4. Money is transferred
Guarantor loans work a little differently to other forms of loan. Where the money would usually be transferred directly to the borrower with most types of loan, it often differs for a guarantor loan. In this instance the money is usually transferred to the guarantor and they need to pass it on to the loanee.
Step 5. Paying us back
The repayment terms will be set up between the lender and the borrower. These will often be either weekly or monthly for a set term. In the best-case scenario, the guarantor won’t have to be involved again after the initial agreement.
If a borrower is struggling to manage their loan and make their repayments, the first thing they should do is contact the lender. This way they can help and find a solution that works best for the borrower, that won’t necessarily affect the guarantor.
If the worst happens, and the borrower can’t make the repayments, even after contacting the lender, then the payment will fall on the guarantor to make. They must do so in a timely fashion to avoid any further issues. If the guarantor can’t make the payments they’ll need to contact the lender to organise a repayment plan of their own.
At Guarantor Loans we are experts in helping you find the best guarantor loan for you. You can compare guarantor loans using our comparison tool, which will match you up with the best lender for you.
Compare Guarantor Loans
To compare the best available guarantor loans for you, check out our guarantor loans comparison tool on our homepage and apply for a guarantor loan today.
Other pages in this section
- What happens if a guarantor cannot pay
- Who can be a guarantor
- How can being a guarantor affect your credit rating