Car Loan - Difference Between Guarantor and Joint Purchaser ?

jdybnsn

I recently helped my young son purchase a new car.
As he has limited earnings I was more than happy to act as his guarantor.
However, it has subsequently come to my attention from the finance company that I am actually joint purchaser of the car with my son. This was news to me and my son.
Can I ask is there any difference between these two positions in terms of responsibility, ownership for insurance purposes, and also affect on credit rating etc. ?
OK if they are one in the same thing but if there is a difference then I feel the garage may have some explaining to do !?

bris

No difference, you are equally liable for the financing of this car. When he doesn't pay you have to.


The car is still his, it's a civil matter between you for the financing only, he is still responsible for insurance etc.


Credit rating is only going to be an issue if it doesn't get paid, but if not it will trash your file too.

Chucky1234

A guarantor guarantees the loan will be paid off, who will only be chased if the borrower defaults on payments.

With a joint purchase you have equal rights and responsibilities as the person borrowing. You have equal right to drive the car as you co-own it when it's paid off.

Usually with a joint purchase it can help the person borrowing to get a better deal as the credit rating of both hirers (i.e. you and the person originally borrowing) so if you have a better credit rating than your son it is likely he has better terms than if he were the sole borrower.

As you are jointly borrowing, you are both liable for the loan repayments, so if you default then its possible you will both get marks on your credit rating.

hollydays

The way I see it , less than " proven to be trustworthy " needs to buy an item.

Trustworthy says" I'll recommend you as trustworthy".
If the buyer defaults-it's on your head- this seems obvious.
Guarantor means you guarentee they will pay or you will.

jdybnsn

Thanks for the replies - do you think the garage should have explained my position & responsibilities ?
I'm almost inclined to think this is a type of mis-selling as this loan has significantly affected my previously near perfect credit rating as I recently bought a car on a pcp myself for the first time ever. Now my credit score is showing & have a £30,000 loan on account, and this seems to have brought my credit rating from borderline 'excellent' to 'fair' !


Normally, I would not be too concerned about my credit rating at all, as I am fortunate enough to live a financially stable life. However, I am in the process of re-mortgaging a property to raise some funds to do up another property, and in no way do I want to jeopardize this re-mortgage.


Had I known it would affect my credit rating my husband would have acted as 'guarantor' as he has no loans/debts etc. at all.

burlington6

jdybnsn wrote: »

Thanks for the replies - do you think the garage should have explained my position & responsibilities ?
I'm almost inclined to think this is a type of mis-selling as this loan has significantly affected my previously near perfect credit rating as I recently bought a car on a pcp myself for the first time ever. Now my credit score is showing & have a £30,000 loan on account, and this seems to have brought my credit rating from borderline 'excellent' to 'fair' !


Normally, I would not be too concerned about my credit rating at all, as I am fortunate enough to live a financially stable life. However, I am in the process of re-mortgaging a property to raise some funds to do up another property, and in no way do I want to jeopardize this re-mortgage.


Had I known it would affect my credit rating my husband would have acted as 'guarantor' as he has no loans/debts etc. at all.

No, the clue was in the term "guarantor"

Your son wasn't good enough to borrow money so you stepped in.

Just make sure he pays

soolin

jdybnsn wrote: »

Thanks for the replies - do you think the garage should have explained my position & responsibilities ?
I'm almost inclined to think this is a type of mis-selling as this loan has significantly affected my previously near perfect credit rating as I recently bought a car on a pcp myself for the first time ever. Now my credit score is showing & have a £30,000 loan on account, and this seems to have brought my credit rating from borderline 'excellent' to 'fair' !


Normally, I would not be too concerned about my credit rating at all, as I am fortunate enough to live a financially stable life. However, I am in the process of re-mortgaging a property to raise some funds to do up another property, and in no way do I want to jeopardize this re-mortgage.


Had I known it would affect my credit rating my husband would have acted as 'guarantor' as he has no loans/debts etc. at all.

It actually would have been very clear from the paperwork what you were signing up to. Unfortunately you do now, in effect, have a high interest loan showing against you.

arcon5

bris wrote: »

No difference, you are equally liable for the financing of this car. When he doesn't pay you have to.


The car is still his, it's a civil matter between you for the financing only, he is still responsible for insurance etc.


Credit rating is only going to be an issue if it doesn't get paid, but if not it will trash your file too.

Actually the difference is massive. For starters if it was a guarantor it wouldn't be on ops credit file