Guarantor for loan

Bob~24601

I wouldn't do it. 

Not only will you be responsible to pay the debt, you will be paying through the roof at 50% interest too, despite the risk being lower for the lender as they will have someone more responsible as a guarantor.

It would be far better to get a loan yourself at a decent rate and give the money to the reletave and ask them to pay you back. 

Ebe_Scrooge

Bob~24601 said:

I wouldn't do it. 

Not only will you be responsible to pay the debt, you will be paying through the roof at 50% interest too, despite the risk being lower for the lender as they will have someone more responsible as a guarantor.

It would be far better to get a loan yourself at a decent rate and give the money to the reletave and ask them to pay you back. 

This question, or variants thereof, crops up fairly regularly on these boards.  The bottom line is:

1.  If someone needs a guarantor loan (cannot get a mainstream loan), this indicates that their credit history is very poor, and there's a high chance of them defaulting.  The lenders, who are experts in such things and who have far more experience than you or I, have come this conclusion for very sound reasons based on factual evidence.

2.  If you decide that you'd like to help your friend/family member, then give them the money yourself.  But do this knowing that there's a good chance you won't get repaid in full.  Look on any repayments they do make as a bonus - view it as a gift more than a loan.

3.  If you really want to give them the money but don't have the cash to do so, taking out a loan yourself will result in a far lower APR than them taking out a guarantor loan.  The net result to you is the same - it's still your neck on the block if repayments are missed, whichever type of loan you take.

So yes, if you're prepared to give them the money as a gift with no expectation of being repaid then fine, go for it.  But "lending" money to family and friends can all to often turn relationships very sour.

zippygeorgeandben

Yes and if you have your own family, you're putting them at risk too.

DCFC79

Just dont, as mentioned your better off taking out a loan yourself.

Whats the money for ?

If for debts maybe you should point them to the debt free wannabe board.

User_101122

DON'T EVEN THINK ABOUT IT.
I used to work at Stepchange and we would get people calling in daily with horror stories about how they had taken out a guarantor loan with Amigo or Bamboo loans for a family member who "promised" to pay it on time each month.  The borrower then couldn't or wouldn't pay and they creditor would then request the guarantor to start making the payments.  Of course by this point usually two or three payments would have been missed and the guarantor's credit file would be trashed.

If the guarantor couldn't afford to make the payment they would end up having the debt enforced against them with a charging order or an attachment of earnings and I have seen families literally disintegrate because of this.

When you are asked to be a guarantor you should think along the lines of "I am borrowing this money not my family member." because you are the one who will be responsible.
If your family member is unable to borrow money any other way it's highly likely there is something on their credit file which you can't see which has spooked mainstream lenders (defaults, ccj's, missed payments).

If you really want to help your family member and you can trust them 100% to repay on time each month, then one option (assuming you have a good credit history) would be for you to obtain a loan from a prime lender at a reasonable interest rate and then give them the capital and let them make the repayments.  This way if they do default on the payments you will still be on the line to make them each month however you won't be paying obscene sub prime interest rates.

However if you want my advice, steer clear and don't feel guilty about telling them the reasons why.