Acting as a gurantor

marywb

My niece has asked if I will act as a guarantor for a car purchase - I am not sure what exactly this means in terms of my credit rating and liability if she does not keep up the payments - can anyone offer any advice?

Thanks

JoeK_3

It means that if she does'nt pay her loan, you will.

Simple as that.

JoeK

scotsgirl_3

It means that you will be legally responsible for the agreement if she breaches it - so if she starts missing payments you would have or the company could take enforcement action against you.

Hope this helps

Bossyboots

Advice - don't do it. My mum almost got stung by doing this and it was only because the loan company hadn't followed proper procedures that I was able to persuade them to withdraw their court proceedings and do things properly. In the end, they agreed not to pursue her for the outstanding amount but it was a very worrying and upsetting time. She had guaranteed the loan for a close family member and I have never forgiven him for what he did to her (he just stopped making payments, even though he could afford them).

jonesMUFCforever

I would agree don't do it.
There is a reason why a guarantor is needed the lender don't trust the person they are lending so they try to get their cake and eat it.
Let her take out HP on the car - they still have the car to reposses if things go wrong.

worto03

I tried to do this for my GF but the loan companies wouldn't let us. I ended up taking out a loan totally in my name & she repays it.

I know the risks involved but it means she can repay her (what were at the time) rather large debts in 3 years which at the rates they were offering her would have taken 6 years with the same monthly payments.

We had been living together for 7 years before we did this & it's working out really well but it's not something I'd enter into lightly & only offered to do it after noticing her attitude to money totally changing.

We have about another year and a half to go then we hope to use her income to double our mortgage payments much more use than giving it to a loan company in interest.

If you have enough cash to take on her loan if she can't or if you think she has a very sensible attitude to money then maybe you should but if you have enough money to do that you'd be better off buying the car for her & letting her pay you back at a much smaller or 0% rate?

Maybe she should look for a cheaper car instead.

Just my 2 pennies,
worto.