I'm willing to act as Guarantor for a good friend. Is there an alternative to Amigo?

icebergx

Hi all
A good friend of mine has had a poor credit rating back to when he was young. In the last few years, I've taken out a £7000 loan for him to consolidate his outdoing debt, and he's always paid on time, so I'm pretty sure that he's changed his financial ways.
He's asked me to act as guarantor for a £5000 amigo loan to buy a car, but the interest rate looks horrendous, at almost 50%apr.
1) are there any guarantor loan companies offering better rates?
2) will taking out such a loan and paying it back help o improve his credit rating?
3) is there anywhere else he may be able to get a reasonble loan rate?

Thanks

PeacefulWaters

If he's changed his ways, why does he need to borrow again?

Key advice - don't do it.

If you choose to ignore this key advice, take the loan out in your name at a better rate and collect payments from him. Your liability is the same, but the cost is lower.

Vikipollard

But he hasn't changed his financial ways if


(a) you had to take out a loan so he could consolidate his debts and


(b) he wants to borrow a ridiculous amount of money he doesn't have for a car - and would even consider stiffing a mate with 50% APR. What savings dos he have? He should already have been saving the monthly figure consistently so he actually knows he can afford the repayments anyway.


Why can he not apply in his own name? If he went down the route of HP, then the money is secured on the car, so if he defaults, they repossess.

Pixie5740

You need your head read if you are even contemplating this.

Is your friend still repaying the £7k loan you took out for him? If so why is your friend looking to get into more debt to buy a deprecating asset. That doesn't sound like someone who has changed their financial ways to me. A £500 car would be more realistic that a £5k car.

If the only way your friend can borrow £5k is using Amigo with you as a guarantor then his credit file is clearly shot to !!!! and he shouldn't be borrowing any more money at the moment....full stop.

dresdendave

General view on guarantor loans or lending money to friends or family is don't do it. If you trust him and are prepared to take the risk of losing the money, you are better off taking out a loan in your own name at a decent APR and then give him the money, the friend can then pay you back month by month.


At least this way when/if his payments dry up, you owe the money at a sensible APR rather than 50%.

WillyWonga

Think twice....

These sort offer loans at 50% to people who could get 7% on the High St. They credit check the guarantor to make sure he/she is of good credit status - they then pay out the money to the guarantor. If a payment fails then they come heavily down on the guarantor. So basically you would be better off getting a loan yourself.

Plus if the car turns out to be a "lemon", then your friend has no car, cant afford to repair it and fails to pay you back.

[Deleted User]

A company called Lendfair were very professional when I once spoke with them.


If you can do it yourself - do, though appreciate you wouldn't be asking otherwise, perhaps.


I really don't know if it does improve credit score, sorry, it was something a short term loan company avoided answering amongst confusion and I'm far from trying to take credit out to prove at the moment. Sorry again.

icebergx

Thanks for all the replies so far.
Yes he paid back the 7000 loan to me in full, without missing a single payment. That loan is now fulfilled and he's debt free, but he still has a bad credit history from the previous debt, that will take time to pass, and he wants to take steps to improve his current credit history moving forward.

It's a good point to say that I may be better off just taking out the loan in my name, and passing on the money to him, but if taking out a loan in his name would help improve his credit rating, we thought this might help in the long term (although it seems a bloody expensive way of doing it!)

He's in a stable £30k+ job so, as a friend, I feel he's good for the money, but of course, if there are better options out there, like getting the car on hp, that would definitely be worth looking into. Can anyone give me more info on this?

Thanks again.

Marktheshark

The only interest rate that interest you is the default one.
That can be several hundred percent APR.
Thats the one you will be paying.

A loan from a sub prime lender will wreck his credit rating not build it.
It will also wreck yours when he stops paying and the mention of them searching your credit file will drop it to the floor. .

dealer_wins

See you next year when you come back and ask for advise about being stuck for £5K as a guarantor!

icebergx

dealer_wins wrote: »

See you next year when you come back and ask for advise about being stuck for £5K as a guarantor!

That's not particularly helpful. I have a good credit rating and can easily afford to make the repayments in either scenario. I'm trying to help a good friend out who's made mistakes in the past. I'm his kids' God father and I know his wife very well too. He's not running anywhere! If you're not here to help, why bother commenting?!

It would be far more helpful to simply say"I don't recommend you do it" than making such a diculous comment, without knowing my, or my friend's circumstances!