Guarantor Loan

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Rates from 7.9% APR. Representative APR 11.9%

Representative example: borrowing £7,000 over 4 years with a representative APR of 11.9%, an annual interest rate of 11.9% (Fixed) and a deposit of £0.00 the amount payable would be £183.99 per month, with a total cost of credit of £1,831.68 and a total amount payable of £8,831.68.

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Vehicle Price:

£ 7000

Initial Payment (Deposit):

£ 0

To Pay Over:

48 Months

Assuming your credit rating is:

Best Available Rate:


Initial Borrowing:


Total Cost Of Credit:


Total Amount Repayable:


Optional Final Payment:


48 Monthly Payments of


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No impact to your credit score

Rates from 7.9% APR: the exact rate you will be offered will be based on your circumstances, subject to status.

Representative example: borrowing £7,000 over 4 years with a representative APR of 11.9%, an annual interest rate of 11.9% (Fixed) and a deposit of £0.00 the amount payable would be £183.99 per month, with a total cost of credit of £1,831.68 and a total amount payable of £8,831.68.

What is Guarantor Loan

A guarantor loan car finance is an alternative method of purchasing your next car. Unlike other forms of car finance such as HP or PCP, a lender provides you with the full amount to cover the cost of your new car directly. This is typically secured by a third-party individual who agrees to take over your loan repayments if you struggle or fail to meet the repayments. This is usually the option where taking a personal loan is not affordable, for example, bad credit.

Step-by-Step Buying Guide

How does Guarantor Loan work?

Here’s a quick example:

Let’s say you want to buy a car worth £10,000 and want to pay it over 48 months. Your insurance, tax and maintenance for this new car would cost you £1000 per year. You want to own the car outright, so you take a personal loan for £14,000 from your lender.

You and your third-party individual sign a 48-month contract at 8.9% APR to repay £348 each month. Your guarantor agrees to make the repayments in the event you are unable to.

With the interest, the total amount you would end up paying will be £16,690. Your lender pays you the money directly, and you purchase the car from the dealer. As simple as that.

You’ll need to provide comprehensive data for your guarantor:

  • Name, address, contact number
  • Employment history
  • Credit rating
  • History of loan and debt management
  • Details on any other guarantor loan
  • Real estate or car in possession

Comparison of Finance Options

Finance Features: Hire Purchase (HP) Personal Contract Purchase (PCP) Personal Loan
Requires initial deposit Optional Optional
Car is yours at the end of the agreement
Fixed monthly payments
Optional balloon (final) payment
Avoid excess mileage charge
Secured against an asset (e.g. a car)
Support with vehicle issues

Pros & Cons of Guarantor Loan Finance

You have a greater chance of getting approval for your car finance loan and may be allowed to borrow more than a personal loan.

You have security that in adverse circumstances, your repayments will be made.

You’ll own the car outright from the start.

Costs for insurance, tax and maintenance can be factored into the amount you wish to borrow.

There are no mileage restrictions.

Your lender will require full honesty about your financial situation.

The interest rates can be significantly higher than personal loans.

If you miss a repayment and your guarantor steps in, your credit score could be negatively affected.

Finding a guarantor can be difficult and you may burn bridges with close friends and relatives.

Frequently Asked Questions

Who can be my guarantor?

Your guarantor typically must be a UK national. They can be a friend, family member or colleague:

  • With no financial link to yourself.
  • That can provide documents on bank details, ID, or credit history.
  • Between 21 to 75 years old.
  • With a good credit score and debt management history.
  • Who owns a home or has lived at the same address for a certain number of years.

Who might need a guarantor loan?

Anyone with poor credit or limited loan history.

Can my Guarantor have poor credit?

No, this is unlikely as they will need to be responsible for making repayments also.

Can I change my guarantor later?

No. As your application and affordability checks are assessed having considered your guarantors background, a reapplication is necessary when changing guarantors. Similarly, your guarantor cannot withdraw unless the loan is repaid in full.

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