Guarantor on bike finance

Geknock

My brother is looking to get a new bike on finance but needs a guarantor, possibly because he has only just turned 18, he asked my dad but his credit score is too low so i offered. I technically earn enough to cover payments if he defaulted, though my dad assured me he would cover it, but will my low annual income affect it? What are they looking for in a guarantor?

[Deleted User]

They're looking for someone with a decent credit history and who earns enough to pay the loan back when the initial applicant stops paying.

Some may require you to be a homeowner, so they can take your house from you if you also decide not to pay.

It's not an offer most people would want to take up.

macman

He's not failed because of his age, he's failed because he has poor or zero credit history.

dealer_wins

Dont do it, this can possibly lead to you, your father and your brother falling out and not talking for decades!

Marktheshark

tell him to save up and buy a second hand one, starting life in debt is the worst start he can make.

macman

What they are looking for in a guarantor is someone else who is legally liable for the entire debt in case of default. If you are content to be in that position, and can pay, then go ahead.

enfield_freddy

the chances are the companies he is looking at are all very high APR , try looking for the same loan under your name/credit record and take the loan out , and make him pay you


if he regales on a loan at 49%APR , you will have to pay it


if he regales on the loan to you , you will have to pay far less

Nasqueron

macman wrote: »

What they are looking for in a guarantor is someone else who is legally liable for the entire debt in case of default when they default. If you are content to be in that position, and can pay, then go ahead.

Corrected that.

There is a reason people with poor credit need a guarantor for this sort of thing as they know they will not pay the bills.

OP - don't do it, no need for him to get an expensive new bike on credit - he's 18, will probably crash it after a week - tell him to save up and buy a second hand one

Caz3121

Geknock wrote: »

My brother is looking to get a new bike on finance but needs a guarantor, possibly because he has only just turned 18,

what is his income and how much does he have in savings? if he is not able to save on a monthly basis with his income, how will he pay the loan repayments?
Better to stick with the bike he has and put the loan repayment money into a savings account until he can afford to replace the bike

andyfromotley

Every week, indeed sometimes every day, people come on here posting,

'I was a guarantor form my brother/mum/girlfriends car. They wrote it off it was worth a fiver but the loan is still for 10k, they won't pay it and the finance company expect me to!!'

Dont do this.

Your brother doesn't need a Guarantor.

He needs a savings account.

paddyrg

Can you take out a loan for the full cost of the motorbike and give the bike to your brother, and ask him to pay you back over x months? Does that sound like a good plan? That's exactly what you're effectively doing by acting as a guarantor, but you're also overpaying for the privilege - higher interest rates and arrangement fees.

Put it like this, the company wants a guarantor because they believe your brother won't pay them back the full amount and will default - so they will come after your assets instead.