privacy policy

Guarantor Loans

If you are unable to get a loan, due to a poor credit history, you could ask a friend or family member to be a guarantor. A guarantor loan could help you borrow what you need, even if you are borrowing money for the first time.

Discover guarantor loans with CashLady

What is a Guarantor Loan?

A guarantor loan is an unsecured loan, where someone else is responsible for making your repayments if you are unable to. For example, if you are unable to pay back your loan and your parent is the guarantor, they will have to pay your monthly repayments for you.

Guarantor loans are a loan alternative commonly taken out by people with a poor credit rating because lenders are reluctant to offer them a loan, without a guarantee that they will be paid back. Often, lenders will need the guarantor to be a homeowner or someone who can prove that they have enough wealth to cover the cost of the loan.

How do Guarantor Loans work?

If you wish to take out a guarantor loan, first you must find a guarantor. This could be a friend or family member who is able and willing to make payments for you if you are no longer able to meet your repayments.

Group of young people discussing the ways to find a guarantor for your loan

Your guarantor cannot normally be someone who is connected to you financially, including partners and spouses. Typically your guarantor will be contacted within 48 hours after your first missed payment as a last resort.

Guarantor loans usually come with high interest rates. Because of this, it is important that you have a good relationship with your guarantor as a high level of responsibility will be placed on them.

Who Can Be Your Guarantor

You can ask someone who is not financially connected to you to be your guarantor, such as a friend, family member or work colleague. In addition, they must:

  • Be 18 or older
  • In employment full time
  • Someone who is not your spouse
  • Someone who does not share a bank account with you
Young people discussing the guarantor loans that can be especislly useful for people with bad or no credit history.

What are Guarantor Loans Useful for?

Guarantor loans are useful if you do not have a good credit history. This is because every time you make a monthly payment on time, you will get a good mark on your credit rating.

This is an effective way to rebuild your credit score, as it makes it much more likely that you will be accepted for credit in the future. Such as, for a standard unsecured loan, mortgage or credit card, without having to use a guarantor.

Yet, this will only work if you make your loan repayments on time. If you fall behind, you could further damage your credit score.

It is good practice to check your credit rating before applying for a loan or credit card because if you are rejected your score could be damaged. The same can be said if you make many applications in a short space of time.

Are Guarantor Loans Expensive?

Guarantor loans can be expensive with the APR generally being around 50%. The rates vary between lenders and depend on your personal circumstances such as your credit rating and employment history.

This rate may appear to be high yet it can be a cheaper option in comparison to some other forms of credit. You are also typically able to borrow for a longer period of time such as from 1 - 5 years.

Cashlady is explaining that the APR of guarantor loans varies from lender to lender

Here is a representative example:

The representative APR rate is 49.7% APR (fixed) so if you borrow £4,000 over 36 months at a rate of 41% p.a. (fixed) you will repay £194.78 per month and £7,012.08 in total.

It is important to consider that some lenders can charge large ‘up-front’ and arrangement fees. When applying for a guarantor loan, do your research and look for these hidden fees as they can end up being very expensive.

What to look out for with Guarantor Loans

It is important to ensure you have a good relationship with your guarantor when opting for a guarantor loan. You both need to understand the level of risk involved.

If you default on your payments, your guarantor will have to cover the rest of your total amount for the duration of the loan term. They could even lose their home.

Try to borrow responsibly and keep your borrowing to as little as possible. While many loan companies will allow you to borrow a guarantor loan amount ranging from £1000 - £7,500, a larger amount can put more of a financial burden on both yourself and your guarantor.

read carefully your loan aggreement if you struggle to pay back your loan

It is also vital to borrow from a loan company that is authorised and regulated by the Financial Conduct Authority (FCA). An FCA registered lender have affordability checks in place to ensure they only allow you to borrow what you can afford to repay.

If you are struggling with existing debts, you should seek advice before considering another loan. Late repayment can cause you serious money problems. For help, go to

Guarantor Loan Summary

Guarantor loans can help you to acquire credit if you have a poor credit history, by letting you use a guarantor to make repayments for you if you are no longer able to. The key things to consider are:

  • Your guarantor can be a friend, family member or work colleague but they cannot be connected to you financially
  • The guarantor is responsible for repaying your loan in the event that you cannot make repayments any more
  • You can usually borrow from £1,000 to £7,500 over 5 years
  • The APR is generally around 50%
  • Guarantor loans are useful if you have a poor credit history
  • It is important to choose a responsible lender who is authorised and regulated by the FCA.

I have read and accept CashLady's
   Privacy Policy and Website Terms
I wish to opt in to SMS and email marketing.
Representative 49.9% APR
Representative Example
Amount borrowed: £1200 for 18 months
Number of repayments: 18
Interest rate p/a: 49.9% (variable)
Each repayment amount: £90.46
Total amount repayable: £1628.28
Secured By Comodo EV SSL CFA logo

Customer Satisfaction & Reviews

CashLady is rated 4.5 stars by and Smart Money People based on 2350 merchant reviews is not a lender but is a fully regulated and authorised credit broker which introduces borrowers and lenders for the purposes of entering into short-term unsecured loan agreements. does not charge customers a fee for using its broker services, but it receives a commission from lenders or other brokers if a customer enters into a consumer credit agreement with a lender or broker following an introduction through this website. is a registered Trading Name of Digitonomy Limited, Registered in England and Wales (Company number 08385135), Registered Office; Steam Mill Business Centre, Steam Mill Street, Chester, Cheshire, CH3 5AN. Digitonomy Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register under reference number: 690249. Licenced by the Information Commissioners Office, (registration number ZA007309) *Once approved, your cash could be sent within 10 minutes. The time that it takes for the cash to be received in your account will depend on your bank’s policies and procedures. Loans available to over-18s only, subject to status © 2020