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Worried about paying back guarantor loans?

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Guarantor loan debts

Guarantor loan debts. How to deal with them.

A guarantor loan is when another person agrees to pay back the loan if you cannot. This is usually a friend or family member.

They are then responsible for any debts on the loan too.

Rental agreements and mortgages can be guaranteed this way too.

Guarantor loans are a type of consumer credit.

They are usually marketed at people who either:


  • Have bad credit or
  • Were turned down by other lenders

Interest rates on guarantor loans are often high.


  • This could be 50% APR (annual percentage rate) or more
  • Larger loans take several years to pay back
  • The interest could mean you pay back more than you borrow

These debts are similar to a joint debts.


  • The person guaranteeing the loan is jointly responsible for the dealing with the debt
  • One person has to pay if the other cannot

signpost iconRead our guide for guarantors and learn about the risks and responsibilities.

How does a guarantor loan work?

The creditor agrees to lend the money based on the guarantor being able to repay the loan in full.

The guarantor must prove they can afford the repayments, based on:


  • Their income
  • Savings
  • Any assets

In some cases:


  • They may secure the loan against their property
  • The loan money may be transferred to the guarantor first
  • They then pass it on to the borrower

What happens if I do not repay a guarantor loan?

The guarantor agreed to repay your loan if you could not.

This puts you both at risk of:


  • The lender asking the guarantor to catch up with payments
  • They may take payment directly from their bank account
  • They do this if they have a Continuous Payment Authority (CPA)
  • This is usually set up when the loan is approved
  • The account defaulting
  • The lender can ask the guarantor to make the payments
  • They may take the money from the guarantor's bank account
  • This gets recorded on both your credit files
  • The normal debt collection process starting
  • The debt can be passed to a collection agency
  • Court action might be taken
  • Stress on your relationship
  • The guarantor may face financial difficulty paying off your debt
  • Their house could be at risk of repossession
  • It could put pressure on their family

These impacts can be painful if your guarantor is a family member or friend.

Are you a guarantor?

Try to agree affordable payment arrangements if you think the account will default.

Are guarantor loans a good idea?

This type of loan can seem like a good way to improve your credit file. But there are serious risks.

  • The cost of the debt can be high
  • The interest rates can be high
  • The debt can lead to further problems

There are safer ways to consolidate debt if that is what you are looking for.

Need help with a guarantor loan?

We can help if you are struggling with a guarantor loan.

Take two minutes to answer a few simple questions, so we can find the best way to support you.

mum at the table with bills

Worried about paying back guarantor loans?

We can help. Find the right support for your situation.

Get help now

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