Guarantor loan - help please

atticusfinch_2

My sister took out a loan with FLM (who are now Amigo) back in 2008 which our mother was guarantor on.

For a variety of reasons, after a while she fell into arrears with the loan, then our mother (the guarantor) passed away in 2009.

Without going into too much detail, the loan hasn't been paid off (nor is she in a position to, and I can't help her either) and it is now on her credit file as a default. I was under the impression that a guarantor loan would only go on the credit file of the guarantor?

I have tried speaking to CAB on her behalf but haven't really got anywhere and someone recommended I ask on here.

Because of this being on her file she can't get a bank account, mobile phone contract, rent a decent property...it's really causing her an issue.

Any thoughts? Advice? (other than don't take out loans if you can't afford to pay them back!!)

Caz3121

The loan would have been in her name so it was her loan. I assume she already had bad credit so she had to go down the guarantor route as her previous financial situation indicated that she may default.
I understand that if the loan recipient defaults then they will chase the guarantor and it would affect both their credit files if still unpaid

Why is she surprised she has a default when she knows she has defaulted. She will still owe this money - has she made any arrangements with them to repay or does she think it will just go away and she can start again

spacey2012

atticusfinch wrote: »

Because of this being on her file she can't get a bank account, mobile phone contract, rent a decent property...it's really causing her an issue.

Consequences of borrowing money with no intention of paying it back I am afraid.

Clive_Woody

atticusfinch wrote: »

My sister took out a loan with FLM (who are now Amigo) back in 2008 which our mother was guarantor on.

For a variety of reasons, after a while she fell into arrears with the loan, then our mother (the guarantor) passed away in 2009.

Without going into too much detail, the loan hasn't been paid off (nor is she in a position to, and I can't help her either) and it is now on her credit file as a default. I was under the impression that a guarantor loan would only go on the credit file of the guarantor?

I have tried speaking to CAB on her behalf but haven't really got anywhere and someone recommended I ask on here.

Because of this being on her file she can't get a bank account, mobile phone contract, rent a decent property...it's really causing her an issue.

Any thoughts? Advice? (other than don't take out loans if you can't afford to pay them back!!)

Has she contacted them about repaying the loan? She could use the mobile phone money to repay her outstanding debt so this may be a blessing in disguise.

BillJones

atticusfinch wrote: »

Without going into too much detail, the loan hasn't been paid off (nor is she in a position to, and I can't help her either) and it is now on her credit file as a default. I was under the impression that a guarantor loan would only go on the credit file of the guarantor?...

...Because of this being on her file she can't get a bank account, mobile phone contract, rent a decent property...it's really causing her an issue.

On the first point, no, she defaulted, so it is correctly on her file. On the second point, this is the system working as it should, I'm afraid. She's shown that she is unlikely to pay back money that she borrows, so of course companies will not want to let her take theirs the same way she took Amigo's.

The best advice is that she gets herself into a position to pay back the loan, then sets about building up a decent credit file again.

In the interim, she should get a cheap handset, and use pay-as-you-go on it. For renting, she'll need to aim for somewhere as cheap as possible, and ofer a few months' rent upfront, to try to convince the landlord that she's a safe bet. Maybe a flat-share would work for her?

DCFC79

All I'll say is she makes contact and arranges a repayment plan to pay it off.

DCFC79

Clive_Woody wrote: »

Has she contacted them about repaying the loan? She could use the mobile phone money to repay her outstanding debt so this may be a blessing in disguise.

It is a blessing in disguise but whether the sister listens to the advice the OP will give her is another story. I hope the sister does heed the advice as it will be easier in the future to get credit.

Apples2

Lenders are very good at predicting if an applicant is going to encounter "a variety of reasons" and so most reject the applicant.

What puzzles me in all of this, if the Sister encountered her "variety of reasons" seemingly almost immediately after the loan was taken, did she have ANY intention of helping mum out with repaying it?

Sounds like your mum was due to continue repaying your Sisters debt until it was cleared with no help at all from the very person who spent it all.

The Default is entirely correct and it is your sisters responsibility to repay it.

How did she even take it out if she didn't have a bank account?
It is normal for the money to be deposited into the guarantors account but she must have had a bank account to open the loan.

Poppops

atticusfinch wrote: »

My sister took out a loan with FLM (who are now Amigo) back in 2008 which our mother was guarantor on.

For a variety of reasons, after a while she fell into arrears with the loan, then our mother (the guarantor) passed away in 2009.

Without going into too much detail, the loan hasn't been paid off (nor is she in a position to, and I can't help her either) and it is now on her credit file as a default. I was under the impression that a guarantor loan would only go on the credit file of the guarantor?

I have tried speaking to CAB on her behalf but haven't really got anywhere and someone recommended I ask on here.

Any thoughts? Advice? (other than don't take out loans if you can't afford to pay them back!!)

I think it must depend on the lender. My son has been working since he was 16, came out of his time and was taken on by the company. He is very well paid for his age.

When he was just starting out I acted as guarantor for his new car as he had no credit history. He made every payment on time and so we thought it would stand him in good stead for when he started thinking about buying his first home.

However when we checked a few weeks ago, the loan only appears on my credit record and not his. We have checked every credit reference agency and his record is totally clear

Bmth100

There's nothing untoward here; the guarantor on an Amigo loan doesn't ever have their credit file affected unless they were taken to court as a result of both them and the borrower not paying back the loan.

However, the borrower would incur late payment markers / a default if they stopped paying.

I'd suggest her getting in touch with them to come to an arrangement.

PeacefulWaters

Poppops wrote: »

I think it must depend on the lender. My son has been working since he was 16, came out of his time and was taken on by the company. He is very well paid for his age.

When he was just starting out I acted as guarantor for his new car as he had no credit history. He made every payment on time and so we thought it would stand him in good stead for when he started thinking about buying his first home.

However when we checked a few weeks ago, the loan only appears on my credit record and not his. We have checked every credit reference agency and his record is totally clear

If he was under 18 at the start the loan is yours and yours only.