Acting as a guarantor

Have you been asked to be a guarantor? We’ll help you understand what it could mean for you. Find out what a guarantor is, who can become one, and the legal responsibilities they have.

 

What is a guarantor?

A ‘guarantor’ promises to repay a debt or loan if the borrower can’t make their repayments . For rental agreements, the guarantor is responsible for covering rent if the tenant fails to pay. It’s a big commitment and it’s important to understand the legal responsibilities before agreeing to become one.

Who might need a guarantor?

Young adults who haven’t built up their credit history could find it hard to get a rental agreement or a car loan. Lenders might also hesitate if they’ve missed payments on their phone contract or credit card. So, if they’ve been refused a loan or rental agreement, having a guarantor could help.

What makes a guarantor loan different?

It’s an unsecured loan where both the borrower and the guarantor are responsible for repaying the debt. And, compared to a standard repayment loan, the interest rate could be higher.

Who could be a guarantor?

Anyone asked to be a guarantor needs to:

  • be over 21 and under 75 years old.
  • have a reasonably good credit history.
  • have enough income or savings to prove they can repay the debt.

The borrower they are guaranteeing the loan for:

  • must not be linked to them financially or share a bank account with them.
  • can’t be their spouse, civil partner or business partner.
  • needs to hold a UK bank account.
  • must be over 18 years old.
     

Your legal responsibilities

Becoming a guarantor makes you legally responsible for the loan or rental agreement if the borrower fails to pay. If you don’t repay the loan or rent, it could result in legal proceedings, which could impact your credit score.

You’ll also be legally responsible for the loan or tenancy period. Remember to get a copy of the loan or tenancy agreement before agreeing to become a guarantor.

Extra support

Loan eligibility

If you’re considering taking out a loan, our guide will help you better understand how a lender may consider your eligibility.

Would I be eligible for a loan?

Your borrowing options

If you’re looking to borrow money, it’s important to make the right choice for your circumstances.

Compare borrowing options

Buying a house in Scotland?

How you buy a house in Scotland is different to the rest of the UK. Our helpful guide breaks down the process into seven key steps.

Buying a house in Scotland

Family finances

Helping you to support your children to grow money confident.

Family finances

Family finances

Helping you to support your children to grow money confident.

Family finances