Guarantor loans

Mattmoo71

Maybe I'm missing something here? Having just watched BBC's Panorama programme about the crippling interest rates of payday and guarantor loans, something suddenly occurred to me. Why, if one is prepared to accept liability of repayment as a guarantor for a loan at circa 50% interest, would one not get the loan at a more competitive rate themselves and draw up a personal repayment contract with their "amigo" in need? Surely the relationship straining net outcome is the same, just without the unscrupulous corporation profiting from borrower and guarantors misery? Who knows, Judge Rinder may even clear the debt if there were a default?
Your thoughts please.
BTW, if you do guarantor a loved ones loan, you clearly don't actually love them.

Granny always said, "never a lender or a borrower be" (accept on 0% credit cards of course)

Johnmcl7

I think in many cases guarantors don't realise what they're signing up for, they believe what they're doing is just giving a reference that the person should get a loan not thinking they're effectively taking out a loan themselves and liable for it if the person doesn't keep paying. It's quite telling that frequently potential guarantors post here asking for advice and when they're advised to take out a loan themselves they say they don't want to do that, they only want to be a guarantor for a loan.

The Amigo adverts used to be highly misleading as they perpetuated this misunderstand about guarantors making it look like they rely on the word of a guarantor rather than credit checking. It's not entirely wrong it's just the credit check the guarantor instead.

Kentish_Dave

Yes, it’s a point that is made on most threads on here about guarantor loans. As pointed out above though I suspect that guarantors don’t understand what being one means or stop to think.

They also believe that their friend / brother / daughter is right when they swear that they will make the payments, so don’t think too deeply about it.

worried_jim

Mattmoo71 wrote: »

Maybe I'm missing something here? Having just watched BBC's Panorama programme about the crippling interest rates of payday and guarantor loans, something suddenly occurred to me. Why, if one is prepared to accept liability of repayment as a guarantor for a loan at circa 50% interest, would one not get the loan at a more competitive rate themselves and draw up a personal repayment contract with their "amigo" in need? Surely the relationship straining net outcome is the same, just without the unscrupulous corporation profiting from borrower and guarantors misery? Who knows, Judge Rinder may even clear the debt if there were a default?
Your thoughts please.
BTW, if you do guarantor a loved ones loan, you clearly don't actually love them.

Granny always said, "never a lender or a borrower be" (accept on 0% credit cards of course)

It was a very interesting program except for the presenter constantly looking like she was sucking on a mouldy lemon, I just wish she kept asking "why?" to drill down on their need for constant borrowing. School uniforms from catalogues? They are a few £ in Tesco, you just knew that child was wearing Nike Airmax @ £90 a pop. Amigo loans for a holiday!
The nice father to be who's ex wife had effectively nicked his money- why wasn't Fiona Phillips knocking on her door to ask what she is playing at?
There is something wired wrong in their brains that they just can't say no (or read the terms and conditions) it was very sad to watch, they should all join the debt free wannabes board on here for some practical advice.
Amigo really do have the perfect business model, albeit not a nice one, I hope the program served as a warning not to get involved.

MEM62

The answer to the OP's question is simple - stupidity.

Nasqueron

Even on PDL company posters you only see a very small "guarantor pays the debt if when the borrower defaults" compared to the rest of the advert.


People are not able to understand the way they work, they also trust their friends/family

Tallaght

Some people have lost homes and cars after agreeing to be a loan guarantor where loans have defaulted.

Carrot007

Tallaght wrote: »

Some people have lost homes and cars after agreeing to be a loan guarantor where loans have defaulted.

But being a unsecured loan I would imagine only becuase they hid their head in the sand until it was to late to do anything about it.


If there are secured guarantor loans out there then they probably deserve it for being so stupid. (no not really but you know!).

Paul_DNAP

I'd guess somewhere in the loan application at the favourable rate they ask you what you intend to do with it and if you said "I am going to lend/give it to a mate" then that may not fit their lending criteria for that product.

gary83

Never used them & not usually one to defend them but the likes of amigo send the money directly to the guarantors bank account for them to pass on the borrower, apart from anything else that would probably make most people wonder just what they were getting involved with. their website seems pretty clear on a guarantor's responsibilities as well;

https://www.amigoloans.co.uk/guarantor-loans

At some point people should have to take responsibility for their own actions, if they weren't sure what a guarantor was and couldn't be bothered spending 5 minutes finding out what it entailed before agreeing to it then they've only got themselves to blame.

normanna

The Panorama Program didn't even attempt to be balanced which is shoddy journalism. However, I do not agree that Amigo should be advertising more loans to people if they know the borrower is already struggling.

One woman even stated on the program that of course people will spend up to their cc limits. Really?!

Agree that people need to take responsibility for their own actions and just say no to borrowing more for things they don't need. I hope I never have to end up resorting to borrowing a loan on high interest, and am sympathetic to others, however, in an attempt to avoid that I don't buy the latest gadget/trainers/phone/etc to have some money for a rainy day.