Guarantor on bike finance

enfield_freddy

paddyrg wrote: »

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.

as suggested further up the thread




quote:


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

National_Debtline

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, 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?

Hi Geknock


You've seen that several of the replies given already are trying to discourage you from guaranteeing this loan, and I won't argue with them.


What I wanted to add is that it's not clear why the bike is such an essential purchase for your brother anyway. At the risk of sounding like an old fuddy-duddy, if I wanted something I couldn't afford at the age of 18, I had to just scrimp and save for it.


I'm sure he wouldn't want to land you (or your father) in financial difficulty, so perhaps it's worth suggesting that he set his sights on a more affordable form of transport for now.


Dennis
@natdebtline

forgotmyname

Check the recent thread where a parent had to stop driving and they let their son? use the car if he paid the monthly fee.

Son crashed the car and from what i remember the insurance want to write the car off and pay the finance off which leaves the son with no car and no money.

So the son claims a refund on all the payments made on the car and now the parent has a massive bill to pay. Shortfall on the insurance payment and many months worth of payments the son claimed were unauthorised.

So much risk, Unless you can afford to buy it outright and let him pay you back monthly. And not be upset if he stops paying you back.

Only then should you think of doing it. How long will the loan be for 1 - 5 years? What if your circumstances change over that time?

Paully232000

I would agree with the comments about not doing it.

However, if you are going to do it then, if you have a half-decent credit history and are able to get a loan in your own name.

Then have your brother set up a payment to you, and if he fails to pay the loan to you you are no worse off than if you had used a guarantor loan company, other than the interest rate is going to be a lot less.

You will read a lot on here about others not paying and you being left with the debt, which does happen, however there are probably hundreds/thousands of people who do similar and all is fine. Not quite the same but i, many years ago balance transferred a CC debt to my other half and continued to pay it off until the BT ended and then transferred it to my own card. It can work out fine.

SeanG79

Actually, Many vehicle finance providers seek a parental guarantor (usually insisting that they live at the same address) for applicants under 21. This is due to minimal credit as opposed to adverse credit, if there is adverse credit it is a decline irrespective of guarantor. (The APR is usually higher than a personal loan).

Guarantor loans are a different story...I would also suggest steer well clear or if you can afford give the person the money if you can afford to lose it, but not take a loan to give to someone else.

Not saying OP should go ahead as it would be better if he could hold off and save up. The need for guarantee however could be entirely due to his age and therefore lack of previous credit.

OP - you could ask your brother to get a copy of his credit report, then you would see if there was adverse information or just minimal information.

chesky

...... A copy of his credit report.....

He's only just turned 18 so doubt it will be very useful.

wiltsguy_2

does he really need a new bike? im 42 and have had 19 motorcycles, only one was new. 2nd hand are lot cheaper and if saved for wont require finance. As other have said if he defaults you will be lumbered with the debt and it sounds that your brother, your father and you are close and willing to help each other...is it worth jeaprodising good relationships over money?

David147

The finance company have asked you for a guarantor as you (probably) don't have enough credit history to have a credit rating. That's not unusual at your age.

Applying for, and being declined credit will always affect your credit rating, and probably that of your mates as they make failed application to be your guarantor.

Your guarantor needs to understand that they will be be required to make any payments you don't. THEY ARE GUARENTEEING TO PAY YOUR BILL and its their responsibility to make sure you keep up with the repayments.

I'm not sure I'd personally act as a guarantor for anyone other than my closest family. It's a big commitment and, if something happens to you, you guarantor will be left with a massive bill.

If you can't get a guarantee from a very close, wealthy family member or friend, it might be with reconsidering you options.

Finally, motorbikes are risky and if you wipe yourself out, your guarantor will be paying your bill long after you're buried.

All things considered, buy a travel card.