What happens if I can’t pay a guarantor loan?
If you fall behind with a guarantor loan or can’t afford to pay it, the lender will ask you to catch up with payments. If you don’t do this the account will default and the lender can then ask the guarantor to make the repayments.
The debt will be dealt with using the normal debt collection process which could involve the debt being passed to a collection agency or court action being taken.
This places a significant risk on the guarantor, as they’ve agreed to repay the debt if you can’t. Any impact that the loan has on your credit file will affect both of you, in the same way as a joint debt.
If a family member or friend is your guarantor, the impact of them having to pay the debt could cause relationship problems, stress and financial difficulties.
Need help with a guarantor loan debt?