to be or not to be - a loan Guarantor??

bubbles567

Hi Everyone

I'm new to the site but been an avid reader and advice seeker in the background.

My friend has asked me to be a guarantor on a loan of about £700, not a lot of money I know. But I do know it's an extension on a loan. I'm more concerend about the impact on me. I'm having a chat with her over the weekend and need to make sure I know the full implications before I agree to help her out.

Will it show on my credit report that this loan exists?

Will it affect my chances of applying for credit in the near future?

I know I'll be liable if they default, but for how much? (I dont think for one minute that any default will happen but I need to know)

I'm trying to clear my debt down, I have a good credit file. I'm naturally wary of getting into this, when I working so hard to reduce my debt.

Can anyone give help?

Cheers

[Deleted User]

Definitely not. The lender believes she will default, so steer clear.

If you really want to help, just give her the £700. You'll end up paying it anyway, but at least you won't trash your own credit file and have to pay interest and charges on top.

malkyh

No, definately not.

bubbles567

Thanks zx81

It doesn't sounds good does it? I can't think why she'd need £700 anyway, she doesn't have a house, car, children.. so what's it for?

I dont have the £700 cash to give her. If I had a spare £700, I'd clear it off my debt or house improvements first (that sounds selfish - sorry)

I'm having a chat with her over the weekend and get more info.

DCFC79

Does 1 really need to ask ? Have a read of the many guarantor threads or the sticky thread about lending friends money which is essentially what your doing.

You say that a default will not happen but thats what the other guarantors have said.

It depends how much you value the friendship and if you totally 110% trust her to not to default on the loan.

lilly2011

I was a loan guarantor and luckily it all worked out but i would never do it again.

Too much stress was placed on our friendship and we are barely in touch now and that was despite her paying it off in full 2 years early

[Deleted User]

bubbles567 wrote: »

Thanks zx81

It doesn't sounds good does it? I can't think why she'd need £700 anyway, she doesn't have a house, car, children.. so what's it for?

I dont have the £700 cash to give her. If I had a spare £700, I'd clear it off my debt or house improvements first (that sounds selfish - sorry)

I'm having a chat with her over the weekend and get more info.

Exactly. My suggestion of you giving her the £700 was a bit tongue in cheek. It's the sort of thing you do for a friend who needs a kidney operation. Not a new X Box or whatever she needs it for.

I would definitely stay away. Once you've spoken to her, maybe you can help her by advising how she can cut back on expenses, or how to improve her credit rating.

But don't feel bad about not being a guarantor. One of the most valuable things you have to your name is your own credit rating, and you need to protect it no matter what.

bubbles567

You are right lilly2011, I dont want it to ruin a good friendship. £700 even at £100 per month... I feel that it would put me in limbo for 7 months....

For the sake of argument... if I did agree.. would this lender do a search on my file? I think so.

lilly2011

bubbles567 wrote: »

You are right lilly2011, I dont want it to ruin a good friendship. £700 even at £100 per month... I feel that it would put me in limbo for 7 months....

For the sake of argument... if I did agree.. would this lender do a search on my file? I think so.

Who is the lender?

[Deleted User]

bubbles567 wrote: »

For the sake of argument... if I did agree.. would this lender do a search on my file? I think so.

Yes. And I believe the loan would also show on your report, potentially deterring other lenders from offering you additional credit, because it will look as if you are already servicing another loan.

bubbles567

Thanks zx81... I guess I feel that I'd be letting her down by saying no. Maybe advice and support on cutting back is the best approach.

Really dont want to go down that route of a guarantor at all....