Asked to be a guarantor - how to say no

Hoogle

Side question relating to this, But I often read people take out pay day loans and then add to it to make repayments etc.
Say I was a guarantor for a friend who took out a £300 loan could he then increase the loan without my knowledge and I would still be guarantor even if the principal loan had now increased to say £600 making me responsible for the new increased loan.

Owain_Moneysaver

Hoogle wrote: »

Side question relating to this, But I often read people take out pay day loans and then add to it to make repayments etc.
Say I was a guarantor for a friend who took out a £300 loan could he then increase the loan without my knowledge and I would still be guarantor even if the principal loan had now increased to say £600 making me responsible for the new increased loan.

It would depend on the terms of the guarantee. I think you can assume that any loan company would have the terms written very much in their favour and you would be liable for the full amount of all borrowing including interest and penalties.

[Deleted User]

Hoogle wrote: »

Say I was a guarantor for a friend who took out a £300 loan could he then increase the loan without my knowledge

I doubt this would be possible without your full knowledge and permission, otherwise the lender would be mis-selling.

However, if you were to be a guarantor (why?) , you would be wise to ensure that you are guaranteeing only an agreed amount and no more.


Pay Day Loan companies are morally reprehensible, but they do stay within the letter of the law (nowadays at least).

dealer_wins

Hoogle wrote: »

Side question relating to this, But I often read people take out pay day loans and then add to it to make repayments etc.
Say I was a guarantor for a friend who took out a £300 loan could he then increase the loan without my knowledge and I would still be guarantor even if the principal loan had now increased to say £600 making me responsible for the new increased loan.

Definitely not!

But avoid any doubt by never being a guarantor!!

bearcat16

A simple and truthful reason to decline is that sub-prime lending (as this is) damages your credit score. Lenders view it as evidence of poor financial management.

Rather than be a guarantor, it would be better (for you and your friend) for you to obtain a loan with a mainstream lender at a decent interest rate (~4%) and then lend that money to your friend. They would then make payments to you.

When you!!!8217;re a guarantor, this is basically what you!!!8217;re doing anyway, only at a ridonkulous interest rate like 49% or whatever.

However, as others have said, it!!!8217;s best avoided altogether.

badmemory

Hoogle wrote: »

Side question relating to this, But I often read people take out pay day loans and then add to it to make repayments etc.
Say I was a guarantor for a friend who took out a £300 loan could he then increase the loan without my knowledge and I would still be guarantor even if the principal loan had now increased to say £600 making me responsible for the new increased loan.

There are threads on here which say that this has happened. I believe it has even happened with a totally new loan.

Fireflyaway

Definitely don't do it. As a guarantor you are liable for the balance if he doesn't pay. The creditors probably won't even chase him that much because its already been established he is a risk. They will come to you! It could ruin your friendship and your finances.
A family member asked us to be a guarantor on his rent. He had been sneaky around other things in the past so we said no. It wasn't worth the risk. He said all sorts of nasty stuff and we haven't spoken since! If your friend is a true friend he will understand. Helping him better manage his finances would be better than helping him get in more debt. Put it that way?

Jackmydad

For what it's worth, I never look at requests for any sort of "favours" as putting me in the position of being a "bad person" if I refuse.
I look at the person asking as being a "bad person" for using our friendship as a lever to ask for a favour.
I don't lend anything out. Neither do I borrow anything.
Or stand guarantor!
Remember, no good deed goes unpunished!
try to get your friend to get help for his money problems as said earlier. That would be a bigger favour for him than anything.

DCFC79

bearcat16 wrote: »

A simple and truthful reason to decline is that sub-prime lending (as this is) damages your credit score. Lenders view it as evidence of poor financial management.

Rather than be a guarantor, it would be better (for you and your friend) for you to obtain a loan with a mainstream lender at a decent interest rate (~4%) and then lend that money to your friend. They would then make payments to you.

When you!!!8217;re a guarantor, this is basically what you!!!8217;re doing anyway, only at a ridonkulous interest rate like 49% or whatever.

However, as others have said, it!!!8217;s best avoided altogether.

You mean credit report is damaged.