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

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Comments

  • Puddylove
    Puddylove Posts: 507 Forumite
    Eighth Anniversary Combo Breaker
    Banks are experts at assessing risk, and have decided, based on past behaviour, that your friend is not worth the risk to lend to.

    So my questions are;
    1. What makes you think you know better than the experts?
    2. Rather than taking out a loan, why doesn't he save the loan repayment amount instead? My car is on its last legs (last tyres?) and so I've been putting £200 aside each month. Soon adds up.
    3. Why does he want to improve his credit rating? To borrow yet more? For what?

    Don't do it - let your friend suffer the consequences of his actions, without dragging you into it. Or just give him the £5k.

    Px
  • icebergx
    icebergx Posts: 688 Forumite
    Puddylove wrote: »
    Banks are experts at assessing risk, and have decided, based on past behaviour, that your friend is not worth the risk to lend to.

    So my questions are;
    1. What makes you think you know better than the experts?
    2. Rather than taking out a loan, why doesn't he save the loan repayment amount instead? My car is on its last legs (last tyres?) and so I've been putting £200 aside each month. Soon adds up.
    3. Why does he want to improve his credit rating? To borrow yet more? For what?

    Don't do it - let your friend suffer the consequences of his actions, without dragging you into it. Or just give him the £5k.

    Px
    1) Im not claiming to know better than the banks, in general, about the majority of the population, but I do know that my friend has paid me back, without fail, for the last 3 years. I do know him well and I'd like to help him out in the most pain free and easy way possible. Hence why I posed the question.

    2) Your suggestion about saving for a car is a good one, but it's not really practice in his case, as he needs one for work. Thank anyway.

    3) As I said, he's currently debt free, but at some point, he may want to get a mortgage or have access to credit in his own name, at a reasonable rate. This is not an unreasonable hope.

    From the feedback provided, I wont be acting as. Guarantor for him, but I would like to find out if his credit rating will affect his ability to get a car on HP? Is HP provided by individual dealers or is it something arranged buy the buyer?

    Thanks again.
  • tomtontom
    tomtontom Posts: 7,929 Forumite
    Does he have a contingency if he loses his job or becomes sick?

    Any reason he has not been able to save before now?

    I'd be pointing him in the direction of the Debtfree Wannabe board - it's not just for people currently in debt.
  • tomtontom
    tomtontom Posts: 7,929 Forumite
    Missed your last post - yes, his credit rating will affect his ability to get HP. There are some lenders that will lend to him, but it is likely to be at a high rate.
  • missbiggles1
    missbiggles1 Posts: 17,481 Forumite
    10,000 Posts Combo Breaker
    Why not compromise and suggest he buys a car for a grand - better for both of you, whatever the outcome.
  • Mojisola
    Mojisola Posts: 35,571 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    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.
    icebergx wrote: »
    I do know that my friend has paid me back, without fail, for the last 3 years. I do know him well and I'd like to help him out in the most pain free and easy way possible.

    As you are confident that he will pay you back, why not follow PC's advice? Put the agreement in writing so you both know what's expected.

    It would also be worth getting him and his OH to look at the Debt-free Board - as tomtontom suggested. They'd be a very rare couple if they weren't able to reduce their spending as a result of the advice given to them. They'd be able to pay off the car loan faster or put the money away for a rainy day fund if you're not in a rush to be repaid.
  • Voyager2002
    Voyager2002 Posts: 16,349 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    An additional point: he can improve his credit rating by getting a credit card, using it for groceries and petrol, and PAYING IN FULL EACH MONTH.
  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
    10,000 Posts Eighth Anniversary Name Dropper Photogenic
    An additional point: he can improve his credit rating by getting a credit card, using it for groceries and petrol, and PAYING IN FULL EACH MONTH.

    I agree with this suggestion. This is the cheapest way for him to start improving his credit file. Combined with a more realistic car of £1k or less would be the more sensible way forward than borrowing £5k at 50% APR.
  • icebergx
    icebergx Posts: 688 Forumite
    Great! Thanks for the suggestions. I'll speak to him about getting a cheaper car and refer him to the Debt Free board.
  • DCFC79
    DCFC79 Posts: 40,641 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Has he not built up any savings especially being on a 30k salary.
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