Any Loan Guarantor loopholes?

DonnaKebab

Are there any tips that forum users can pass on to the rest of us in case loan companies comes chasing a guarantor for money that a borrower has defaulted on? (I don't need no lecture about being stupid enough to accept being a guarantor by the way, that's not what I want to hear! I know, I know...)

PeacefulWaters

DonnaKebab wrote: »

Are there any loopholes or tips that forum users can pass on to the rest of us in case Amigo (or any other loan companies for that matter ) comes chasing a guarantor for money that a borrower has defaulted on?

No.

What would happen if we closed the account where the funds were originally placed into? What would happen if they could not phone/contact the guarantor?

They will knock on the door. If you move, they will trace.

Also, does anyone have any tips on how to say politely and firmly to close friends and family "no I will not be a guarantor"?

You say "no, I will not be a guarantor".

What kind of fool proof reasons (i.e. lies ) could you give when you say no to them and they beg you and give the sob stories?

You sympathise and lecture them on the benefits of a contingency fund.

National_Debtline

Hi there,

I've not heard of any loopholes to speak of but I will say that the whole notion of guarantored loans isn't something that I'm personally comfortable with unless the guarantor is made fully aware of the potential pitfalls. From anecdotal evidence from our callers, some of these firms do not seem to make clear what the potential ramifications might be. In essence, there is little difference between standing as guarantor and taking out a joint loan with the person in question.

If you were to close the original account you could still be chased for payment. If the lender cannot get hold of the guarantor it may not prevent further action which could include debt collection agencies and possibly legal action.

As an aside, it would be interesting to see a challenge - either via an argument of an unfair relationship under the Consumer Credit Act or possibly an arguement as to the legitimacy of guarantor contracts. I'm saying this as an individual genuinely interested in Consumer Credit issues - rather than the opinion of my organisation, although we do have a large number of callers with concerns over these type of loans.

Best wishes,

David @ National Debtline.

National_Debtline

Oh, I forgot to add, as regards agreeing to stand guarantor I can appreciate the position family and friends can put you in but it's important to be firm with them if you can. Perhaps investigate alternative options such as credit unions?

David.

dealer_wins

Amigo make it very clear what being a guarantor involves.

OP you agreed to be a guarantor, and unless you want a trashed credit record and a potential charge on your home I would fulfil your obligations!

matttye

If you're concerned enough about being a guarantor to ask about ways to avoid your responsibilities as one on a forum, then you shouldn't be a guarantor!

Edit: in addition, nobody should agree to be a guarantor unless they're willing to pay off the entire debt - if it comes to that.

fwor

DonnaKebab wrote: »

Also, does anyone have any tips on how to say politely and firmly to close friends and family "no I will not be a guarantor"? What kind of fool proof reasons (i.e. lies ) could you give when you say no to them and they beg you and give the sob stories?

Given that a loan of this type requires a guarantor with an excellent credit rating, you could explain to them that, due to a default on one of your own loans a while ago, your credit rating is too poor for any lender to accept you as a guarantor on a loan.

forgotmyname

Give them the same answer you would give if they asked you to lend them the money.

PeacefulWaters

Amigo make it pretty clear on their website. Here are their criteria for guarantors. While I might dislike their business they are crystal clear up front.

They are also smart enough to require a guarantor to be a homeowner. This significantly reduces the chances of the borrower's chosen mug doing a runner.

Be able to afford to make repayments if the borrower doesn't pay
Be aged 18–75
Have good credit
Be a UK homeowner (don't worry your home isn't at risk)

https://www.amigoloans.co.uk/Be_A_Guarantor

Herzlos

If you're stuck paying then the cheapest option for you is to take out another loan at a sensible rate, because you've got a good credit history and clear the Amigo loan. You can't get out of it, but you can avoid paying 50% APR on it.

Then refuse to guarantee anyone else's loans because you've been burnt (and will be paying it off for a while).

RuthnJasper

Grim situation for the OP... but are people really allowed to post questions on the forum asking for advice on how to defraud a loan company (even though the loan company isn't one of the greatest)...?