What Happens If A Guarantor Is Declined???

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  • dealer_wins
    dealer_wins Posts: 7,334 Forumite
    I would go further regarding the good replies already. If you have £2500 available gift it with no expectation of receiving it back.

    If you dont have the money, or find this idea unpalatable (its exactly the same as being a guarantor but much MUCH cheaper and wont result in the end of a friendship/family breakdown) then politely decline to help.
  • bris
    bris Posts: 10,548
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    The answer you are looking for is yes, the application is in your name, you are the one who is really taking out the loan despite whoevers name it is in.


    This may or may not limit your chances to borrow as this loan will be on your file but you credit score means nothing to lenders, affordability does.


    You can have a perfect credit score that looks great on paper, but in reality if you already have credit cards, loans, car finance etc you will be limited on future chances.
  • Back in the day when I was under financial stress I considered asking someone to be a guarantor for an Amigo Loan. I can say 100% that I'm so pleased I never went down that avenue. I think I would have struggled to have kept up with the sky high repayments thus potentially destroying the relationship I had with the person I was asking.

    If you do get declined I think it will be a blessing for you and the person wanting the loan.
  • MEM62
    MEM62 Posts: 4,732
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    edited 20 February 2019 at 10:30AM
    Ryanw96 wrote: »
    Hi all

    Hello :-)
    Ryanw96 wrote: »
    I've been asked to be a guarantor for a small £2500 loan.

    Oh dear.... :-(
    Ryanw96 wrote: »
    If I was to be very lucky and be declined to be guarantor, would this effect my credit rating?

    I'll have corrected that for you. Being refused is the best thing that can happen. It will save you having to pay your friend/relatives loan off at extortionate interest rates when they default.

    Here's the (somewhat obvious) clue - if you friend's financial standing is that bad that they cannot access mainstream lenders then they should not be borrowing money. You are being asked to be a guarantor because the lender does not think that your friend will meet their payment obligations. They will be vey accomplished at risk assessment in that respect. What makes you think you know better?
  • badmemory
    badmemory Posts: 7,631
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    I'm sure one of the old Amigo loan adverts referred to the guarantor repaying the loan when you don't. Not if but when. Speaks for itself really.
  • Exodi
    Exodi Posts: 2,835
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    Ryanw96 wrote: »
    for a small £2500 loan.

    I'm either cynical or Sherlock Holmes but this sentence rang alarm bells with me as I've seen it posted so many times on these forums from people receiving the loan. Nearly always things like "it's just £2,500", "only £2,500", "a small £2500 loan" to justify and comfort themselves that it's not that big of a deal and they're not impacting the guarantor that much.

    Whether you're the guarantor or not, don't do it. Take out (or tell them to) a personal loan instead as it's the same thing, just at 1/10th of the interest.
    Know what you don't
  • System
    System Posts: 178,077
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    If it is Amigo Loans that £2500 loan is £4390 in total repaid over 3 years, £5133 over 4 years, £5928 over 5 years so you're not just liable for £2500 but those amounts unless you can find a way to repay the outstanding balance in full if the person you are being a guarantor for defaults.
  • Thank you all for the replies.

    I thoroughly understand what it entails, the person who has asked me is family, so it's safe to say I know where they live!!! ;)

    I was curious as I read that being a guarantor doesn't show on your credit file UNLESS the loanee defaults or doesn't pay, then it appears on my file as a loan against me.

    For that reason only I was prefering to be the guarantor instead of getting the loan out myself as I don't want it showing on my file that I have loans etc.

    The interest isn't as high as a company such as Amigo Loans, roughly they'll end up paying back around £3500 over the term and god forbid if they were to die or not be able to afford the payments, I could clear it.
  • worried_jim
    worried_jim Posts: 11,631
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    Dont do it x 1000 = happiness.
  • dealer_wins
    dealer_wins Posts: 7,334 Forumite
    Again I will say, never borrow to help others, even family. If you have savings and are prepared to possibly not get the money back, then gift them the money.

    If you have no savings then dont do it under any circumstances, you never know if and when you will have an emergency requiring money that you wont be able to borrow because of the guarantor loan!!
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