What is The Difference Between Being a Guarantor a Co-Signer or an Authorised User?

In some instances when we apply for a loan, the lender may feel we can afford the loan, but they want some other insurances to protect their investment, which their investment is the loan.

There are ways lenders can try to limit their risk on a loan, especially if the borrower may have had bad credit in the past.

A lender can:

* Reduce the amount they will lend, or in the instance of a credit card, offer only a low credit limit initially

* Lenders can reduce the term of a loan, from say 48 months (4 years), to 24 months (2 years). This allows them to get their money back at a quicker rate.

* Request a larger deposit, such as with car loans and mortgage loans for properties.

* Condition the loan requesting a co-signer or a guarantor.

There may be other condition for a loan as well, but requesting a co-signer or guarantor are the most popular.

Guarantors can also be used in situations outside of borrowing and loans, a landlord may request a prospective tenant have a guarantor on the tenancy agreement.

As we will see, co-signing and guaranteeing a loan are very similar, however, there are some subtle differences. And being an authorised user on an account, is a whole different matter.


Being a guarantor on a loan is in essence saying, if the borrower fails to pay the payments on the loan, I will pay the payments. This may be for a short time until the borrower can afford to repay the loan again, or it may be for the remaining term of the loan.

In order to be a guarantor for a loan, you must know the borrower, they can be a friend, family member, colleague, just someone you know well.

A guarantor is like a “secondary form of repayment” to a lender. The only time a gurantor becomes liable for the loan payments, is if the borrower fails to pay them.

Guarantors are used a lot for business loans. Unless a company has a proven track record of success and profits, the bank or lender will ask one of Directors to sign as guarantor.

As a guarantor the loan you are guaranteeing does not affect your credit unless:

* The borrower defaults and you fail to repay the loan.

* If when you apply for credit, that lender holds the loan as an obligation against you.


Co-signing for a loan is similar to guaranteeing the loan, but has some minor differences, one being as a co-signer you are just as responsible for the loan as the borrower. If the borrower fails to pay, then you are expected to pay.

The difference is that in co-signing it can be a couple together signing for the loan, usually residing together. This doesn’t mean a friend or family member cannot be a co-signer, but in some instances it is people residing in the same household.

In addition, a loan may be conditioned or require a co-signer for affordability. Both parties income are needed to qualify for the loan, such as in a mortgage loan.

Both incomes may be needed to get the loan, where as in a guarantor loan, only the borrower’s income is used for an affordability test, the guarantor is just there if the borrower defaults.

Look at co-signing as the borrower is not financially strong enough for the loan, so they need a co-signer.

Authorised Users

Being an authorised user on an account is very different than being a co-signer or guarantor.

Authorised users are usually associated with credit cards, but they can be for other banking situations.

As an authorised user you have full use of the credit card or the account. You can make purchases and use the card the same as the person whose name is on the account.

You are an authorised user, not the account holder. As such, you are not responsible for the account, or the payments.

Authorised users have no liability for the account.

Technically an authorised user could use a credit card to its maximum credit limit, and not be responsible for payments.

This is why allowing someone to be an authorised user on account you are responsible for, must be taken seriously and thought through.

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<strong>What is Our Criteria For Applying?</strong> 
Every lender on our website has their own specific criteria by the basics are mentioned below and you must have a guarantor to be eligible. Simply select the lender of your choice and you will be taken directly to their website where you can apply. You will be required to submit your details including:<li style=”text-align: center;” data-mce-style=”text-align: center;”>Name (must be over 18 as the borrow, 21 or 25 as the guarantor)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Residence (your chances will improve if your guarantor is a homeowner)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Employment status (must be employed or on a pension)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Income (earning at least £600 per month and able to make repayments)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Monthly expenses (not have too many loans open or in major debt)</li>
You will then be asked to include the details of your guarantor and as mentioned above, this is usually someone who you know and trust and wants to help you with your personal finances. Ideally, a guarantor with good credit will maximise your chances of being approved based on the idea of ‘if someone with good credit trusts you, well we can too.'<strong>How Much Can I Borrow From Guarantor Loans?</strong>Guarantor Loans gives applicants the chance to borrow £500 to £15,000 depending on the lender. Some lenders we feature like Buddy Loans only have a maximum loan value of £7,500 and TFS Loans is the only lender that stretches up to £15,000.Factors that can influence the amount you can borrow revolve around having a good guarantor. One that is a homeowner, with solid employment, income and good credit rating will maximise your chances of borrowing the largest drawdown possible.The lenders featured on Guarantor Loans see a homeowner as someone who has already gone through the rigorous process of credit checking and affordability and if they can afford a house, they should be able to act as a guarantor for you.By comparison, having a guarantor that is not a homeowner offers slightly less security and means that amount you can borrow is slightly less too.Higher amounts may be available to those who already have a better than average credit rating, are homeowners themselves and a repeat customer with the lender who has already paid their loan on time. To apply directly with your lender of choice see <a href=”” data-mce-href=””>direct lenders</a>.<strong>What Does The Guarantor Have To Do?</strong>Upon completing an application, the lender will typically send you a <a href=”” data-mce-href=””>pre-contract loan agreement</a> and SECCI (Standard European Consumer Credit Information form) which will highlight the terms of your loan. You and your guarantor will be required to review the terms of the loan, including the loan drawdown, fees, repayment dates and responsibilities – and this can be signed via an online verification process using your email and mobile phone.The lender will usually carry out an individual phone call with you and your guarantor to ensure that you both understand the responsibilities and what is required of you – notably that if you cannot make repayment, your guarantor will be required to pay on your behalf. Further to some additional credit and affordability checks, funds can typically be transferred within 24 to 48 hours (or sometimes on the same day).<strong>Are Guarantor Loans Available For Bad Credit Customers?</strong>Yes, even if you have a history of adverse credit, <a href=”” data-mce-href=””>CCJs</a>, bankruptcy or IVAs several years ago, you can still be eligible. The idea is that you are using your guarantor and their financial history to ‘back you up’ and give your loan extra security. However, it is noted that your guarantor should have a good credit score and consent to co-signing your loan agreement.<strong>How Soon Can I Receive Funds?</strong>Guarantor Loans works with lenders that can facilitate funds within 24 to 48 hours of approval, or sometimes on the same day.When your funds are successfully transferred, most lenders working with Guarantor Loans will send the full amount to the guarantor’s debit account first. This is a standard security measure carried out by lenders to ensure that the funds are going to the right person and confirms the involvement of the guarantor. The guarantor usually has a ‘two week cooling off period’ where they can decide to pass on the money to the main borrower or they can change their mind and return the funds with no extra charges.